Hopes of Fed Pause Diminished

Good morning,

Good news is now bad news, as an upbeat jobs report has threatened stocks by encouraging the Fed to resume its fiscal tightening course. Central bankers, including Fed Vie Chairwoman Lael Brainard, are now reiterating their plans to raise interest rates in upcoming meetings. That said, the S&P 500 has bucked its most recent downtrend on the short-term chart. So we'll keep our fingers crossed for improvements if we're staying long.

MARKET SNAPSHOT

*Stock prices as of yesterday’s market close. Crypto prices as of yesterday at 6 PM ET.

Anyway, here's what other wealth and health news is on our radar today:

• Tips to start your day/week
• What an upbeat jobs report means for stocks

HEALTH

7 Best Ways to Start Your Day and Week

Maintaining optimal health depends on forming good habits.

And the most important habits take place in the morning and beginning of the week because they set the tone for everything that follows.

Good morning habits create a solid foundation in our day that allow us to be more physically fit and mentally productive.

Here's a short list of the most important habits we can adopt to improve our days:

• Wake up early: If we don't wake up early, we'll spend the rest of the day playing catch up. Waking up early allows us to slow down so that we can really focus on each task at hand without rushing through it. It prevents us from leaving task incomplete and skipping meals. The early hours of the morning can allow time for some of our most productive and creative activity, since there are less distractions from other people.
• Drink water: Aim to drink 2 cups (16 oz) of water immediately upon rising and starting your day. Staying properly hydrated right from the get-go can help boost energy levels. It can help boost the metabolism and fight toxins. And it can lead to a clearer complexion and more radiant skin.
• Exercise: Taking time to exercise in the morning can help us wake up, maintain our heart health, increase blood flow to boost cognitive performance throughout the work day. Running can not only support our cardiovascular health but also help us reduce stress. Lifting weights for an hour before breakfast has been shown to help the body shed 60% more calories than those burned during afternoon or evening sessions. On alternating days, doing some yoga or stretching in the morning can be greatly beneficial.
• Take a cold shower: Taking a cold shower, first and foremost, can help you become more energized and alert and prepare you for your work day. It has also been shown to improve circulation in the body, prevent you from getting sick, and reduce muscle pain. If stepping immediately into a cold shower is too difficult for you, try starting with hot water and then turning the faucet all the way to cold for the last 30 seconds.
• Eat a healthy breakfast: Breakfast of whole grains and adequate protein is key to starting off the day right. And don't forget to include foods with lots of vitamins and antioxidants and healthy fats. Good options are oatmeal with nuts and blueberries. Or an egg sandwich with avocado. A good quick alternative is a protein shake, which can be especially helpful on days of intense workouts.
• Meditate: A meditation of just 15 or 20 minutes can be enough to provide mental clarity that boost our productivity and creativity as we start our day. It can also help us break through limiting belief systems that inhibit our personal growth. Try focusing on the breath and returning your attention to the breath anytime thoughts and distractions arise.
• Check the markets: The markets open at 9:30 EST. Although it is helpful to observe what is happening at the market open, it is also a time of the choppiest trading. Consider waiting an hour or two until the volume has settled down until making big investments. 

MARKETS

Upbeat Jobs Report Diminishes Hopes of Fed Pause

May jobs numbers indicate that unemployment levels have fallen. Payrolls increased by 390,000 over the past month, surpassing economist's expectations...

Which is good news for the market, right?

Not so fast. The market now lives under the Fed's reign, and good economic news gives it more incentive to continue its aggressive rate hiking cycle.

Coming up, central bankers are expected to raise interest rates by a half-percentage point in June, July, and also September. And it doesn't stop there. We could expect a very aggressive Fed for the next 6 to 9 months.

Odds of Reversal

If any factors could subdue the Fed's rate hiking conviction, it would be these:

Despite recent gains in employment, unemployment levels still remain 822,000 below levels when the pandemic first struck.

The May gains in employment were also accompanied by average hourly earnings that rose less than expected.

More importantly, the latest gains in employment are backwards looking and may be short lived. Lots of companies, especially within the tech sector, are already announcing hiring freezes.

• Tesla (TSLA) will be reducing head count by 10% per an email sent by Elon Musk to employees on Friday.
• Robinhood (HOOD) said that it planned to lay off 9% of its workforce.
• Coinbase (COIN) told its staff that it would slow hiring in the midst of the crypto plunge, despite its earlier plans to triple hiring in 2022.
• Twitter (TWTR) paused hiring, fired two executives, and cut the budgets within its cloud computing departments.

That said, the odds they will back down from their efforts to tame inflation is very low, given the consensus that soaring prices are currently the nation's biggest issue.

It would take a very significant shift in the labor market for the Fed to reverse its course, according to Bank of America.

The bottom line: This is only just the beginning. The Fed plans to increase its interest rates from the present 0.75%-1% range to a 3.25%-3.50% range by mid-2023. It also just now starting to shrink its massive $9 trillion balance sheet that it doubled in size to help offset the covid health crisis.