Thursday's Scoop: Stalled 🌤️

Hey friends - almost Friday. You’re doing great.

Insiders, look out for the Weekly Scoop tomorrow.

Here’s what you need to know today to inform your work, spending, and investments…

1. US banks are ready to weather a financial crisis if there is one.

2. Layoff rates are still low, but finding a job is getting harder.

3. Businesses have cut back on investment spending.

Unemployment Rate: 4.0%
^{Still near the lowest rate in 50+ years}

Layoff rates are still pretty low, but finding a job is getting harder. The Labor Department reported that initial jobless claims decreased slightly last week to 233,000—still normal but almost concerning. However, the number of people receiving unemployment benefits for consecutive weeks rose to the highest level in 2.5 years, indicating that getting rehired is becoming more challenging. The number of available positions has shrunk in recent months to near pre-pandemic levels as companies cut back hiring plans, but the available positions are concentrated in specific industries.

Businesses aren’t investing as much in self-improvement. The Commerce Department's Census Bureau reported a surprising decline in business equipment and technology spending last month. Non-defense capital goods orders, excluding aircraft, dropped 0.6% in May after increasing 0.3% in April. So-called core capital goods are a proxy for business spending and investment. High borrowing costs and weakening economic optimism may be discouraging business owners from buying expensive, long-term equipment like computer systems or machinery.

The Market: ⬆️ +0.1%
S&P 500: 5,482.87
1Mo: +3% | 1Yr: +25% | 5Yr: +86%

The market didn’t move much again on Thursday as investors waited for the wave of month and quarter-end data releases starting next week. We’ll start to get a better picture of hiring, inflation, job openings, and corporate profits to validate the prevailing narrative of slowing spending and low inflation.

Regulators are confident that US banks can weather a financial crisis. The Federal Reserve's annual stress test showed that the 31 most systemically important banks in the US could withstand a severe recession scenario. This year's test included big names like JPMorgan Chase and Goldman Sachs and smaller regional lenders like Truist, modeled surging unemployment and plummeting commercial and residential real estate values. Despite projecting steep potential losses, the banks maintained more than the required minimum capital. A new type of exploratory analysis tested the largest banks against sudden funding stresses and trading meltdowns, which they also passed. These results highlight the strength of the US financial system to future bank failures but also point to areas needing vigilance as financial risks evolve.