Weekly Playbook: June 9th

CRCL goes public on NYSE while Musk goes public on Trump

Key Takeaways This Week

• The May jobs report revealed modest job growth and steady unemployment, but a shrinking labor force and tighter supply complicate the Fed’s policy path.

• Musk and Trump’s feud dominated headlines, with their "bromance" turned battle knocking Tesla shares down nearly 15%. The spat raises concerns over governance and regulatory risks, unsettling investors.

• Circle’s IPO soared ~170%, highlighting renewed institutional enthusiasm for crypto despite persistent regulatory uncertainties.

• Rising bond yields dampened hopes for near-term rate cuts, even as political pressures push for monetary easing.

Market Overview

Last week’s markets showed resilience despite geopolitical tensions, mixed economic data, and high-profile political drama. Investors focused on the May jobs report, which became the main driver of market sentiment. The report showed 139,000 new nonfarm jobs added and an unchanged unemployment rate of 4.2%, modestly beating forecasts. However, the labor force contracted slightly, and payroll numbers for previous months were revised down, pointing to a tighter labor market than the headline suggests. Wage growth held steady at 0.4%, supporting consumer spending, yet slower job creation combined with tighter immigration policies continues to constrain the supply of workers. This dual dynamic complicates the Federal Reserve’s path forward. Bond yields rose in response, lowering expectations for a near-term rate cut despite political calls from President Trump for aggressive monetary easing.

Amid all the economic noise, the Elon-Donald drama took center stage, delivering plot twists worthy of a soap opera. Their public feud rattled Tesla investors—knocking the stock down 15%—and raised questions about Tesla’s governance and potential regulatory scrutiny. Analysts still back Elon’s AI and self-driving vision, but the bromance-turned-battle adds plenty of uncertainty. Rumor has it Donald tried to deflect by hinting Elon’s rocket launches are just expensive cover-ups for revealing their private group chat. Meanwhile, Elon fired back, slyly reminding everyone of Donald’s alleged connections to certain infamous island parties. Investors are left wondering if this market volatility comes with a side of popcorn.

In the crypto sector, Circle Internet Group’s IPO was a standout event that energized the market. The stock surged roughly 170% on its first trading day, pushing its market capitalization close to $20 billion. This rally signals renewed institutional enthusiasm for digital assets, reinforcing crypto’s growing acceptance as a legitimate asset class despite its characteristic volatility. Bitcoin’s rebound above $100,000 alongside expanding corporate adoption highlights how cryptocurrencies are increasingly integrated into mainstream financial markets. This is happening even as regulators continue to refine their approach to digital assets, making crypto’s path to broader legitimacy dynamic and somewhat uncertain.

Looking ahead, market watchers prepare for key upcoming catalysts. Apple’s Worldwide Developers Conference will offer insights into technology trends, while earnings reports from Oracle, Adobe, and other major firms will provide clues about corporate health and consumer demand. Inflation data for May is expected to show persistent price pressures, reinforcing expectations that the Fed may hold interest rates steady for some time. The labor market’s nuanced signals—steady unemployment coupled with labor supply constraints from demographic shifts and immigration policies—pose structural challenges that the Fed’s traditional tools may struggle to resolve.

On a broader scale, capital markets are undergoing a transformation as investment increasingly shifts from regulated public markets to rapidly growing private markets, which often operate with lighter oversight. This shift raises questions about systemic risks and market efficiency, especially as private markets attract large pools of capital seeking higher returns and earlier access to innovation.

After a period of underperformance, small-cap stocks have begun to stabilize, supported by improving fundamentals and increased AI adoption that may enhance growth prospects. Meanwhile, despite crypto’s volatility, growing institutional involvement and evolving regulations are facilitating its integration as a potential alternative asset class alongside traditional equities and bonds.

For more details, visit Barron’s: here

The episode 195 of The Compound and Friends highlights key 2025 surprises: markets rebounded sharply from April lows, driven by strong consumer spending and corporate margins amid ongoing volatility. Younger investors show higher risk tolerance, supporting market resilience. AI remains the dominant investment theme, with heavy company spending despite dips. International stocks have outperformed the U.S. so far, aided by fiscal shifts in Europe and a weaker dollar. Cash levels remain high (~$20T), reflecting investor caution. Morningstar’s CEO emphasized AI’s role in automating advisor tasks, growth in active ETFs, expanded private market access, and a shift toward private credit amid bank pullbacks. Overall, labor market trends, tariffs, and Fed policy remain key market drivers.

Watch it here: The Compound

In the June 3 Ed Yardeni Weekly Webcast, Yardeni highlights a strong V-shaped U.S. market recovery after early 2025 tariff shocks, though new highs are yet to come. He expects eased trade tensions and extension of 2017 tax cuts, potentially adding $4 trillion to debt over ten years without major new stimulus. The economy is buoyed by baby boomers’ $80 trillion net worth, fueling spending and wealth transfers. Wage growth, employment, and consumer demand—especially for services—are robust. Tech capital spending, particularly in AI and data centers, drives growth. Inflation pressures persist from steel tariffs and cost pass-throughs. Yardeni notes cautious views on Japan and Europe, increased focus on Asia, and potential tariff relief ahead of Trump-Xi talks.

For the full webcast, visit Yardeni Research on YouTube.

Earnings Recap

Dollar General (DG)

Dollar General exceeded expectations in Q1, posting $1.78 EPS (+$0.30 beat) and $10.44 billion in revenue (+5.3% YoY). Same-store sales grew 2.4%, fueled by higher transaction values despite slightly lower traffic. FY25 guidance improved, with a raised lower-end EPS range ($5.20-$5.80) and stronger revenue growth outlook (+3.7%-4.7%). Gross margin gains came from lower shrink and better inventory markups, while store remodels and merchandise updates drove market share gains, especially among middle- and higher-income trade-in customers.

The stock surged past its $105 resistance area, closing at $113.48. This rally highlights confidence in DG's turnaround strategy and resilience to economic challenges.

DocuSign (DOCU)

DocuSign delivered a mixed Q1 report, exceeding EPS estimates with $0.90 (+$0.09 beat) and revenue of $763.7 million (+7.6% YoY), topping forecasts. The company guided Q2 and FY26 revenue above consensus and authorized a $1 billion increase to its share buyback program. However, billings rose just 4% YoY to $739.6 million, missing guidance and slowing from prior quarters. Full-year billings guidance was also slightly lowered, attributed to timing issues in renewal processes and customer segmentation changes, rather than demand weakness.

The stock sliced through its first support zone near $84 and flipped its key $78 level after open, plunging nearly 19%. The rare billings miss and cautious guidance spooked investors, overshadowing strong revenue momentum and platform expansion efforts.

Lululemon (LULU)

Lululemon delivered a mixed Q1, beating EPS with $2.60 (+$0.02) and posting $2.37B revenue (+7.3% YoY), in line with forecasts. Comparable sales rose 1%, with a 2% decline in the Americas offset by 6% growth internationally. Gross margin expanded 60 bps to 58.3%, but macro headwinds and cautious U.S. consumer spending weighed on results.

Disappointing guidance sparked a selloff: Q2 EPS was guided below consensus at $2.85-$2.90 vs. $3.29 expected, and FY26 EPS trimmed to $14.58-$14.78. FY26 revenue guidance held steady at $11.15-$11.30B. Tariff costs, FX pressures, and slower U.S. sales are compressing margins, while China offers long-term growth potential.

Investors couldn’t even push the stock back to test the key $288 level, as weaker guidance overshadowed margin gains and product refreshes, keeping caution high over U.S. traffic softness and cost pressures.

Key Index Charts

Last week showed broad strength across major U.S. equity indices, with SPY rising 1.65% and QQQ gaining 2.08%. Small caps also advanced, as IWM increased 3.33%, reflecting continued market optimism. DIA followed with a 1.31% gain.