To The Moon

Will Trump and Bessent online verbal abuse pressure US central bank to buckle and cut interest rate in July FOMC when the team convenes on July 29-30 ?

For starters, the current administration is already planning to board a shadow Fed chairman who does not have executive power (yet), a white elephant, wasting tax payers’ monies, instead of cutting expenses to slow down US national debt accumulation.

If the decision is based on facts, then it should be a resounding “No”.

The jobs reports out this week points to that clearly.

ADP non farm payroll.

US private sector non-farm payroll report for June 2025 was published on Wed, 02 Jul 2025.

Key takeaways:

• Report showed US private sector lost 33,000 jobs, marking the 1st monthly decline in over 2 years, sharply missing expectations for job growth.

• Job losses were concentrated in (a) professional and business services, (b) education, (c) health services. (see above)

• While job growth could be found in sectors like (d) leisure, (e) hospitality, and (f) manufacturing.

• Despite contraction in employment, annual pay growth for job-stayers remained steady at 4.4%, indicating that wage pressures have not yet eased.

• The report signals a softening US private sector labour market. It raised concerns about economic momentum.

• It also increased likelihood of the Fed cutting interest rate should weakness persists.

US Non Farm Payroll.

US Non-farm payroll report for June 2025 was released, on 03 Jul 2025, eve of US Independence Day.

Key takeaways:

• US job growth was unexpectedly solid in June 2025, increasing by 147,000 jobs vs market consensus of 111,000 vs last month’s upwards revised 144,000 (from initial 139,000).

• However, nearly 50% of increase in nonfarm payrolls came from the government sector.

• Private sector gains was the smallest in 8 months as businesses battled rising economic headwinds.

• Report is consistent with the ADP non-farm payroll data released a day earlier.

• The only piece of “good” news out of the Non-farm payroll report is the falling unemployment rate, from 4.2% (May 2025) to 4.1% in June 2025.

• Analysts have attributed the marginal decline because more than 1 million foreign-born workers left the labour force.

• As a result, that rebalancing enables the jobless rate to stay unchanged or even drop, despite an increase in the number of people out of work.

• This argument is further supported by the average workweek was shorter last month, suggesting businesses were probably reducing hours.

• Does this warrant for a celebration ? The answer is obvious, no ?

Jobless Claims.

(1) Weekly.

• For week ending 28 Jun 2025, weekly unemployment filing fell by -4,000 to a seasonally adjusted 233,000 vs Economists’ forecast of 240,000 vs last, last week of upwards revision of 237,000.

• This has been the lowest since mid-May 2025.

• The less volatile 4-week moving average also slipped to 241,500, a decrease of -3,750 from 21 Jun 2025’s revised average of 245,250.

• Overall, weekly claims stayed at levels consistent with a further loss of labour market momentum in June 2025.

(2) Continuing.

• For week ending 21 Jun 2025, continuing claims held steady at 1.964 million.

• It is the highest level since late 2021.

• This implies while layoffs are low, those who lost their jobs are finding it harder to secure new employment.

• The 4-week average of continuing claims rose to its highest since November 2021, reinforcing the view that job seekers are facing longer spells of unemployment.

• This could reflect a cooling in labour demand or sector-specific challenges.

Looking at the 4 jobs reports released over the past 2 days, the Fed is expected to keep interest rate cut on “Hold” until clearer signs of labour market weakness or lower inflation before considering.

It does however raise the prospect of a bigger cut if & when US central bank restarts its monetary policy easing cycle.

This was similarly echoed by Scott Bessent in his interview with Fox Business on 03 Jul 2025 while piling pressure on Mr Powell to “right-sized” Fed’s budget ie. cut interest rates.

CME Fedwatch Tool.

After the jobs reports were out, the odds of a cut at the Fed's July 28-29 meeting fell near 5% from nearly 25%, according to the CME FedWatch tool. (see above)

July 2025 Catalysts ?

Post Coviid, the month of July has consistently been one of the best-performing months for US market.

Catalysts that drove (past) strong July include:

(1) Expectations of Federal Reserve rate cuts:

• Markets often rallied on the anticipation or signals of easier monetary policy.

• This was especially obvious, when economic data (such as softer inflation or weaker payrolls) suggested the Fed might lower rates soon.

(2) Rotation into small caps and value stocks:

• July frequently saw a shift from mega-cap tech ("growth") stocks to small-cap and value stocks, which tend to benefit more from lower rates and improving economic sentiment.

(3) Strong earnings season:

• Robust corporate earnings, especially from sectors outside of the dominant tech names, provided additional support to equity markets.

• Looking back, since the US banking debacle in Q1 2023, the Financial sector has managed to pick itself up nicely and continued to power through.

• Banks like $JPMorgan Chase(JPM)$, $Goldman Sachs(GS)$ and $Morgan Stanley(MS)$ have consistently handed in excellent quarterly earnings report cards.

• On 27 Jun 2025, the Fed concluded its latest stress tests on US mega banks. Results were published that day, with all 22 of the largest US banks passing the tests. (see below)

• The successful results clear the way for increased capital returns, including higher dividends and stock buybacks.

$SoFi Technologies Inc.(SOFI)$ Rub Off Effect.

As not every investor could afford to pile into US megabanks where their stock price is easily north of $80 per share (except for $Bank of America(BAC)$).

In the midst of the euphoria from the Fed’s Banks Stress Test, investors took a chance on SOFI as well.

Of course, this coupled with other reasons like :

Raising guidance:

• Management has repeatedly increased its revenue and EBITDA forecasts for 2025, signaling confidence in continued business momentum.

Crypto and technology initiatives:

• With the Trump administration pushed towards the embrace of cryptocurrencies, this pseduo currency once again come into focus.

• SOFI’s announcement of new cryptocurrency features and global remittance services has excited investors.

• This has positioned SOFI as an innovator at the intersection of traditional finance and digital assets.

• The return of crypto trading and blockchain-based services is seen as a potential new revenue stream.

This begs the question - is it SOFI’s time ?

• In Trump-Musk Clash, buy RKLB, GSAT & AMZN ! Fri, 04 July. Picked post.

• Will US Market & CYN Make A Recovery Today ? Thu, 03 July. Picked post.

• NVDA, JPM, UNH - H2 2025 Best US Stocks ? Wed, 02 July. Picked post.

• Do you think its time to take a leap of faith in SOFI, the digibank before it skyrocket ?

• Do you think Financial Sector is poised to do well until end 2025 & beyond ?

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