Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Monday, June 10. The Bottom Line segment of today’s podcast starts at (4:22) for listeners who want to skip ahead.
State of Play
Non-farm payrolls printed significantly hotter than anticipated on Friday, leading to a selloff in bonds. Stocks were mostly unaffected other than small caps, which continue to sell off. As we look at our board of indicators at 0645, things are pretty quiet ahead of the new trading week:
European elections seem to have impacted stocks trading on the old continent, especially in France where the CAC finds itself down 2% at midday. The FTSE in London and DAX in Frankfurt are less affected. Stock index futures in the US are moving lower led by small caps. The Russell 2000 is down 0.7%;
Commodities are rebounding a bit. Copper is up 0.5%. WTI crude oil is unchanged trading around $75.50/barrel. Silver is up 1%. Natural gas up 2%;
Bonds are unchanged. The 2-year yield is 4.88%, which is quite a bit higher than it was at this time on Friday morning. You can thank non-farm payrolls for that. The 10-year yields 4.45%.
Cryptos aren’t doing anything, perhaps the clearest indication we will have a quiet day ahead. Bitcoin is changing hands around $69,300.
Today’s Known Events
It’s a pretty slow day. Apple (AAPL 0.00%↑) hosts its Worldwide Developer Day, or WWDC, this week. The proceedings kick off at 1300 with the keynote by Apple CEO Tim Cook. You can expect a lot of talk about AI of course. CNET has a pretty good preview if you care about these things. It’s no secret that Apple’s stock could surely use a kick in the rear end, having underperformed major indexes for the past year. Hard to see how yet more talk about AI will supply that. There could be something else in Cook’s speech that will.
The Bottom Line©️
Tomorrow is a slow day as well but don’t get too comfortable because we have inflation and the Fed coming on Wednesday. Until then things may be in a holding pattern.
An Opportunity?
Toyota Motor (TM 0.00%↑) is getting beaten up after the company was caught falsifying data. The stock is down 5% over the past week and 10% over the last month. That’s ugly, but how big of an impact will this really have on Toyota’s future? It’s the most popular automaker in the world (second in the US market). Will this really get consumers to stop buying Toyotas? Maybe a little? Is that already impacted in the share price?
As you can see Toyota is still above its levels from the start of the year and may not look particularly cheap from the above chart. Still, it’s fallen from its perch quite a bit and trades at just ~11x forward earnings.
The Contrarian does not hold Toyota shares but is intrigued by this latest movement and would certainly consider buying if it drops below $200. Unfortunately that may not happen as there are indications the low is already in. TM is up 1% in the pre-market.
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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Apple WWDC