🎙️ Roaring Back

💼 Turns out the labor market is still going pretty strong.

U.S. job growth exceeded expectations last month, although the unemployment rate rose slightly to 4%, creating a mixed picture of a labor market that has been gradually cooling without causing significant concern for most workers.

According to the Labor Department's report on Friday, total nonfarm U.S. jobs increased by a seasonally adjusted 272,000 in May. This figure surpasses both the previous month's total and the 190,000 jobs that economists had anticipated. Plus, average hourly earnings grew by 4.1% compared to the previous year, exceeding forecasts.

The unemployment rate increased from April's 3.9% to 4%, marking the first time it reached this level in over two years.

— Matthew & Shawn

Here’s today’s rundown:

Today, we'll discuss the biggest stories in markets:

• GameStop, Keith Gill, and the SEC

• America’s first $100 million-a-year athletes

This, and more, in just 5 minutes to read.

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In The News

😮 A Wild Week for GameStop, Keith Gill, and the Memes

Meme stocks are back, yes, but GameStop's stock plummeted as much as 44% on Friday after the company unexpectedly released disappointing Q1 earnings results and announced plans to sell up to 75 million additional shares. 

The news came just as Keith Gill, 37, known as "Roaring Kitty," made his highly anticipated return to YouTube with a livestream discussing GameStop.

Meme craze: During the rather bizarre livestream watched by over 600,000 viewers, Gill confirmed that the massive GameStop positions posted on his Reddit account are legitimate. He praised CEO Ryan Cohen and expressed faith in GameStop's business transformation plans, helping fuel another surge of speculative trading in the stock this week. The stock was halted for volatility several times during the livestream. 

• But the company’s share sale plans and weak Q1 results, which revealed declining sales and a wider-than-expected loss, ultimately sent the stock tumbling. (Over 40 million shares were traded during Gill's roughly 50-minute stream alone.)
  

• The new share offering could raise around $2 billion for GameStop, adding to the nearly $1 billion raised from a previous offering last month. Some view the capital raises as savvy moves to strengthen GameStop's finances, while others see it as exploiting meme stock mania at the expense of existing shareholders through dilution.

Rally, rally: Gill's return and cryptic social media posts over the past month had fueled a ~167% surge in GameStop's stock price and added $11 billion to its market value despite the company's fundamentals.

Why it matters:

Gill’s activity has raised concerns about potential market manipulation, with reports that brokerage E*Trade is considering banning him from its platform due to his influence. He has more than one million X followers, and he’s helped drive a 20x surge in visits to GameStop’s page on Stocktwits. 

But the platform is also reportedly afraid that kicking off Gill would trigger retaliation from his millions of fans on Reddit, and it could prompt many other investors to leave E*Trade.

In the process, Gill has reemerged as “the face one of the biggest momentum trades in recent memory, with many individuals piling into GameStop with no regard for its fundamentals,” WSJ reported. 

• The SEC is expected to scrutinize the trading around Gill's involvement, though proving manipulative intent would be required for any market manipulation case, and that’s not easy.
  

• "It's safe to assume that the SEC will at least take a hard look at the trading,” one former SEC senior counsel told Bloomberg.

Final word: Gill’s position is now massive, with over $200 million in GameStop as part of a portfolio that has swelled to over $500 million.

Although many retail traders are enthusiastic about the latest meme craze, analysts caution that the fun might not last much longer. "GameStop's stock price is completely divorced from its business,” one warned.  

Read more

More Headlines

📈 S&P 500 closes the week in the green, near another record high

🍲 Restaurants are having their biggest year ever  

✂️ ECB cuts rates for the first time since 2019

🏠 Apple explores home robotics as ‘next big thing’ after car fizzles

🤖 Regulators open antitrust probes into Nvidia, OpenAI, and Microsoft

☕️ Starbucks teams up with GrubHub on delivery after a challenging year

🏀 America’s First $100 Million-a-Year Athlete

The NBA Finals are underway — the Boston Celtics won Game 1 vs. the Dallas Mavericks — and there’s a lot of talk about how much these players are earning. It’s eye-opening.

Michael Jordan and LeBron James are transformative NBA stars and the wealthiest players of their times. Jordan earned $94 million over his career, and James is projected to exceed $500 million in career salary. 

But that’s just the beginning. Luka Doncic, a young star in the NBA, is on track to surpass their combined earnings, potentially making over $1 billion in his career. Other stars are on pace to earn hundreds of millions of dollars over their playing careers, often over by the time they turn 40. 

• “$100 million is really unbelievable,” Bill Duffy, Doncic’s agent, told The Wall Street Journal. “It just shows the impact of sports, the impact of media, the impact of globalization, and the economics that drive this business.”

Driving the trend: NBA salaries are skyrocketing thanks to the league's massive media deals, which bring in billions of dollars. 

• The NBA's salary cap, which determines player salaries, keeps climbing, driven (mostly) by increasing media rights revenue.
  

• Players like Doncic and others in their early to mid-20s, such as Jayson Tatum, Jaylen Brown, and Victor Wembanyama, stand to benefit.

Financial health: Consider the NBA's economic structure, where players receive about half of the league's revenue. That supports the high salaries, reflecting the sport's growing financial health and the increasing value of live sports in the media landscape. The NBA is nearing a $76 billion media rights deal with NBC, Amazon, and Disney, meaning a lot more cash in the pockets of the stars whose faces define the league. 

• The league's minimum salary for first-year players now exceeds $1 million, a once unimaginable figure. As the salary cap rises, players like Doncic on maximum contracts could soon earn $1 million per game within the next few years.
  
  

Why it matters:

The league's massive media deals, rising salary cap, and revenue-sharing model have created an environment where young stars like Luka Doncic and others in their early to mid-20s stand to benefit immensely. 

As the NBA grows in popularity and revenue, the next generation of superstars may redefine what it means to be a highly-paid professional athlete.

As WSJ reports, “Top players are entitled to approximately 35% of a team’s salary cap, a spending figure that reflects the league’s overall revenue. That amounts to about $50 million today for star players like James and Stephen Curry.”

Quarterbacks and sluggers: Leading the pack is Patrick Mahomes, the Kansas City Chiefs quarterback, who inked a 10-year deal worth over $500 million in 2020, making it the richest U.S. sports contract at the time. 

Baseball phenom Shohei Ohtani, who signed a 10-year, $700 million deal with the Los Angeles Dodgers last year, cemented his status as the highest-paid athlete in American sports history.

Read the full list of NBA salaries

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Quick Poll

On Wednesday, we asked: Do you think the dominance of Big Tech stocks like Apple, Microsoft, Nvidia, and Alphabet in the S&P 500 is masking broader investor concerns about higher interest rates?

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