June 8, 2025
Weekly Market Outlook
By Geoff Bysshe
Last week, the S&P 500 reclaimed the $6,000 mark with the help of a surprisingly mediocre monthly employment report.
There is an important market message here, and…
It coincided with a big breakout in silver, which has a chart that has been preparing for a big move for months.
Last week also saw a big rotation into two economically sensitive commodities and into small caps!
If stocks closing in on all-time highs, accompanied by breakouts in precious metals, commodities, and small-cap stocks, don’t get your attention, then…
Did you see the crypto-related IPO that legitimizes America’s path of adopting crypto as a new preferred form of payment, analogous to the invention of credit cards?
The IPO was one of the largest in decades. Its stock soared over 250% in two days, establishing the company’s value at over $16 billion.
We’ve got a lot of opportunities and insight to cover in this week’s Market Outlook!
American Exceptionalism, Transitory?
The last time the S&P 500 was trading at $6,000 (February), the market was commonly described as benefiting from “American exceptionalism.”
Well, the market has a way of humbling such confidence.
It’s not a surprise that the phrase didn’t make its way into the market conversation on Friday, considering the medias “hot topic” wasn’t even the economic report. The media was more interested in the war of words playing out in public statements between the President and Elon.
The other reason, “American exceptionalism” will probably go the way of another notorious phase, “transitory”, can be seen in the chart below, which shows that the MSCI All Country World Index (ACWI) is outperforming the S&P 500 by 4.8%.
If this trend holds, it will be only the 4th time in 17 years that the S&P 500 has trailed the world index.
As we’ll review below, the global outperformance is actually much bigger than the ACWI suggests.
This underperformance by the U.S. may not seem consequential right now, but just like the mediocre employment report on Friday demonstrated, “news” like this can have unanticipated consequences on market action that you can profit from if you know how to use it.
Here’s how…
On Wall Street, sometimes bad news is good news, good news is bad news, and occasionally…
Like last Friday, the market is pleasantly surprised when an economic report comes in at the same level as the consensus forecast. Positive surprise?
The S&P responded with a 1% gain, even in the face of 10-year bonds falling, which pushed interest rates higher.
Friday’s nonfarm payrolls report delivered 139k jobs, which was only 13k more than the consensus forecast. That’s the second smallest difference from the forecast in the last 18 reported months (a period which has had an average “miss” of 62k).
So, given the emotional headwinds of poor global relative performance, along with childish U.S. politics, while we await Congress’s attempt to pass a budget, it’s not surprising that “as forecasted” news would put stock investors in the mood to push stocks up 1% and create a breakout over a level that has been a ceiling since mid-May.
Here's why…
Investors can be a sensitive and fickle bunch, and…
On Wednesday, ADP released its Nonfarm Employment data, and it was much weaker than expected (37k vs. 111k forecasted). As shown in the chart below, the report recorded the smallest number of jobs since 2021.
This negative report had investors bracing for a negative surprise in the more important Friday BLS Nonfarm Payrolls report.
The Friday Payrolls and Unemployment Report
There are several key questions that investors are looking for the monthly report from the Bureau of Labor Statistics (BLS) to answer right now.
The media likes to make headlines and stir up debates with the nuances of all the data in this report, but most of the time, you can focus on the main numbers, the trends, and of course, most importantly, the market’s opinion of the report!
The Payrolls
The “mediocre” payrolls are in the chart below.
The trend over the last five months is essentially flat, and the level could be debated as either bullish or bearish, but it’s unlikely to change investors’ minds.
As for the Fed, over the weekend they released a “Flash Report” which is NOT an emergency, it’s simply their notation of a report that periodically highlights notable economic data releases.
This report had as one of its three main takeaways…
“Employment conditions in the U.S. remained historically robust last month, but modest signs of deterioration began to emerge.”
This is consistent with the Fed’s view of the labor market prior to the report.
Unemployment
Below you’ll see the trend in unemployment along with the recent data points showing their deviation from the forecast.
The red line is merely an illustration of the trend's flow.
When you consider the deviation and the trend, you see that the drop in the beginning of the year was a pleasant surprise, but it was followed by unexpected increases, and has since leveled off and landed at expected levels.
The administration’s immigration policy is going to keep the unemployment rate data a hot topic for a long time with “interesting” arguments on both sides of the interpretation of its real and most important trend.
Keep in mind (or even read their Flash Report) that they are ultimately still likely focused on this high-level data point to drive policy decisions, despite their statement reflecting that the underpinnings of its calculation are showing “modest signs of deterioration.”
This Is Where The Data Gets Interesting! Wage Inflation?
Lastly, here is the report on wages. More specifically, it’s the trend in the year-over-year percentage change in average hourly earnings.
You don’t need to be an economist to see the trend and the levels that are depicted with the red lines, or to disagree on which direction wages growth headed.
The dashed line shows that prior to the pandemic the rate of growth in earnings was about 3% per year.
The curved red line shows that after peaking in 2022 at 5.6%, the earnings growth rate slid steadily down to about 4% where it has leveled out for about a year.
So, are wages rising in a way that is inflationary?
Consider that the Fed’s target for CPI is in the low 2% range.
Of course, don’t forget to consider how the administration’s immigration policy might impact wages.
Are wages still sliding, anchored at this level, or setting up to reaccelerate?
Here’s what Fed Governor Christopher Waller said in a recent speech when considering the idea that consumers' expectations of higher inflation in the future would lead to a demand for higher wages.
“Although that was the story a few years ago in a tight labor market, I am not now hearing about such an upturn in wage demands from my business contacts, and I don't see it in wage and compensation data. After several years of outsized pay increases and in a labor market that has loosened significantly from a year or two ago, I think workers don't have much leverage to ask for raises and are probably more worried about keeping their jobs right now. Furthermore, instead of increasing, the quits rate is below its pre-pandemic level. Given labor market conditions, it seems hard to believe that the high inflation expectations we are seeing in consumer surveys will lead to large nominal wage increases and a second-round burst of inflation.”
In summary,
That all sounds like reason enough for the bulls to dismiss the ADP data as being “volatile” and let the prevailing optimism continue.
The Payrolls Report Didn’t Crash The Party
The bullish market action wasn’t just significant in that the S&P 500 rallied.
The Payrolls Report can change the tone of an entire week, and there was a lot of enthusiasm outside of the S&P 500 that didn’t get spoiled.
In fact, the chart below shows where the SPY fell in the lineup of the bullish performance last week (the left side) with the perspective of the year-to-date performance of the same list of countries, commodities, and themes.
Returning to the U.S.’s under performance relative to every part of the world, the YTD (right side) chart shows the SPY underlined in red dashes sitting lower than every other country ETF listed and well below the leaders of Italy (EWI), Germany (EWG), Mexico (EWW), and Korea (EWY).
However, rather than focus on the U.S. underperformance, I’d prefer to see the positive in the spectacular performance around the world. Stronger global markets may reduce the attractiveness of the U.S., but if it is a sign of global economic growth, U.S. companies will find ways to benefit from that.
Are Precious Metals & Commodities Signaling Inflation and or Global Growth?
The other sign of expectations for growth (albeit also inflationary) is last week’s performance in several economically sensitive commodities. The most notable being copper (COPX). While COPX tracks the copper miners, the ETF CPER, which tracks the copper futures, has similar and stronger performance, as shown below.
COPX is breaking a major trend line from its multi-year highs and its 50-week moving average.
CPER had broken out to multi-year highs until the Liberation Day and tariff war brought it crashing down. However, it has since recovered much of its losses and last week cleared the pivotal $30 level. Both charts could accelerate higher.
The other big breakout last week occurred in silver as it climbed above a double top spanning back to October 2024 and March of 2025.
This breakout fuels a belief that Mish has been speaking about for quite some time, which is that silver has been very inexpensive relative to gold and was in the process of getting ready to move higher to catch up.
As you can see from the chart below, the red box shows gold (candle charts) breaking its 2020 highs in March of 2024. Silver (black line) broke its 2020 high in April 2024.
However, gold proceeded to rally relentlessly. In fact, it has only traded below (never closed below) a prior month’s low since. Members of our MarketGauge discretionary services should recognize this trailing stop and trend following tactic.
Silver has been less impressive. In fact, it has returned to its April 2024 breakout level 3 times since.
As a result, the consolidation range from the October 2024 high through last week marks an impressive range from which silver has just broken above.
Since its 2024 breakout, gold has rallied about 65% while silver has risen by less than 20%. If Silver were to “catch up” to gold’s performance, that would put it up near its 2010 highs around $46.
Crude Oil
Another economically sensitive commodity on the move last week was crude oil (USO). Unlike the metals, this is not in a bullish trend.
Crude oil has been one of the worst-performing assets on the chart above this year.
Last week, it was one of the strongest on the list. This is noteworthy for several reasons. First, as you can see in the chart of the oil futures below, the price area of $60 - $65 has been a pivotal area.
The ETF for oil, USO, shown below has a very different long-term pattern in its trend, but the price area of $60 - $65 is just as important. In fact, the green moving average is the 200-week moving average. The break back above that level is a very bullish signal.
Both charts show a breakout, or near breakout, over the last two months of consolidation in or above the key $60 - $65 range.
The second reason oil is noteworthy is that its price is influenced by consumer demand, which can make it a valuable indicator of economic strength. Currently, however, there are several other big factors influencing its price – geopolitical tensions, the Ukraine war, sanctions, OPEC disagreements leading to Saudi Arabia increasing supply.
The recent months of consolidation and last week’s move to a higher level is consistent with a corresponding rally in global equities and a decline in the Polymarket’s market for the odds of a recession in 2025 from 65% down to 26% in the last 6 weeks. See the chart below.
Will Oil Stoke Inflation?
The most noteworthy and timely reason to take note of the potential reversal in the trend of oil is its potential impact on inflation.
Like all relationships in the economy, an exact measure of how higher oil prices lead to higher inflation is impossible. However, the table below shows estimates by economists and analysts.
Sources: [1], [4], [5] , [6] , [7] , [8]
Next Wednesday, we’re going to get CPI data. The forecast is for the report to show YoY of 2.5%, which is up from 2.3% last month. I don’t know how much, if any, of that increase is attributed to the recent rise in oil prices, but based on the table above and charts below, it seems reasonable to expect that any meaningful rally in oil in the future will have inflationary impacts.
For anyone like me, who likes a simple chart to see the relationship, to believe it…
The chart below is one of the inflation measures we’ll get on Wednesday, and I’ve marked it with arrows representing points where the data has turned or accelerated.
Then, on the following chart, you’ll see arrows corresponding to the same time points on the oil futures chart.
You don’t need to be an economist to see a relationship here.
Perhaps the most concerning potential consequence of crude oil bouncing off the $60 level is not that it will rally and increase inflation, but rather that it seems likely to have bottomed. This suggests that the deflationary pressures we’ve enjoyed for the last three years may be coming to an end.
Small Caps Turn Up!
On Friday, the 10-year bond fell, pushing rates higher, and despite this potential headwind, the IWM broke out over a major resistance level that has been important in the last several months, in 2024, 2022, and 2021. This level is the top black dashed line in the weekly IWM chart below.
This breakout has the support of several bullish factors that could propel it higher.
If IWM moves over its 50-week (or 200-day) MA, the longer-term Real Motion (50/200) will likely turn bullish (orange circle), and the price action will be in the strongest position to trend higher as it has been since last August.
The IWM has been the laggard of the major indexes (DIA, SPY, QQQ), for a long time. It never exceeded its 2021 high.
Perhaps the market is sniffing out the passing of Trump’s budget bill, and expecting that to ignite the “pro growth” animal spirits.
Maybe the market is anticipating that the administration’s isolationist policies will lead to a rotation out of big-cap multi-national companies and into small-cap domestically focused businesses.
Or…
Maybe, the AI, crypto, space race, and quantum computing trends will empower the success of hundreds or thousands of small businesses to flourish and grow quickly.
The market has a way of being one step ahead of most investors.
It’s time to focus on the market’s message with respect to small caps.
For example, read about the Circle IPO below.
Did you see the Circle IPO?
On Thursday, the company, Circle (CRCL), went public with excitement that led its initial issue to be 20 times oversubscribed. In its first day, it jumped 167%, then to over 200% by the second day.
More important than its success in the stock market is what its IPO represents for the future of money and finance.
Circle is the issuer of the second largest stable coin known as USDC. It represents about 24% of the stablecoin market. Tether represents about 60% of the market.
Stablecoins are crypto tokens that peg their value to an asset like the US dollar. One way to think of stablecoins is that it’s a technology that allows you to convert dollars into a “digital dollar” that can give you all the benefits of crytpo and all the stability of the fiat dollar.
Stablecoins are likely to be the gateway to crypto being adopted by the mass market of consumers and businesses.
The fact that CRCL was able to become a NYSE listed company further legitimizes stablecoins and the crypto industry’s mission to change the technology that enables electronic payments globally.
This IPO has changed the prospects of the industry that saw Facebook (Meta) try to create a stablecoin in 2019 only to have the government shut it down in 2021.
Four years later (today)…
The IPO and the growth of stablecoins are just the beginning. These will both facilitate more widespread adoption of blockchain technology, financing, and regulation of the industry.
The crypto world is beginning to meld with the traditional finance world and NOW is the time to focus on it as if it’s a hot industry just like you would focus on NVDA because it builds the technology we call AI.
There was a lot in this week’s column is a function of the fact that there is a half a dozen transformative megatrends that are not going away any time soon and they are all working right now. Many are building on the momentum others.
This abundance of change and opportunities is also why last week we launched a new trading service called the Active Investing Edge!
The Active Investing Edge service is centered around live mentorship sessions that happen every day from 9:00 - 10:30 ET in which we actively follow the markets, trading opportunities, and trade them. We work on day trades, swing trades, options trades in stocks, ETFs and futures.
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 Every week we review the big picture of the market's technical condition as seen through the lens of our Big View data charts.
The bullets provide a quick summary organized by conditions we see as being risk-on, risk-off, or neutral. The video analysis dives deeper. |
Summary: Markets showed broad-based strength with most sectors and asset classes in accumulation phases, led by semiconductors. While some volume and inflation signals remain mixed, improving internals and leadership from growth and foreign equities support continued bullish momentum.
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