Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Monday, Nov. 27. The Bottom Line segment of today’s podcast starts at (4:07) for listeners who want to skip ahead.
State of Play
Things were quiet over the Thanksgiving weekend. Early reports of Black Friday sales are encouraging. As we look at our board of indicators at 0640, a little bit of risk-off appears to be emerging:
Stock index futures are flat with the exception of small caps, with the Russell 2000 down 0.5%;
Commodities are down, with WTI crude oil about 1.5% lower to trade around $74.50/barrel. Copper is down 0.5%;
Bonds are unchanged. The 2-year yields 4.95% whilst the 10-year yield is 4.48%. Worth pointing out that those are both higher than they were last week;
Cryptos are down a bit, with Bitcoin off 1.6% to trade around $37,000.
It’s a crucial period for retail sales in the US. You had Black Friday on Friday and Cyber Monday today. From all reports, Black Friday online sales were very strong, with an increase of 2.5% over last year ex-auto sales, according to Mastercard. Not sure when we’ll get Cyber Monday data or if there is even still a distinction from Cyber Monday over Black Friday and the entire week leading up to and following Thanksgiving. But early reports are encouraging, so there is that.
New home sales for October are out at 1000. Economists expect 721,000 sales, down from the 759,000 seen the previous month.
The Bottom Line©️
Things should be slow, with little in the way of known events that can move markets. We get Fed speakers starting tomorrow and the PCE Deflator, the Fed’s preferred inflation gauge, is out on Thursday. Some earnings thrown in there as well.
This is another chance to take a psychological pulse of the market. With nothing on the calendar to impact risk sentiment, investors are left with the base instincts of fear and greed to drive them. If we see buying today that means greed is still the boss, as it tends to be in a bull market. Even FOMO is just greed masquerading as fear.
At some point there will probably be profit-taking. The famous Santa Rally could postpone that until the new year or beyond. Of course, an actual definition of the Santa Rally’s timing is elusive. It may be the type of thing that is only applied after the fact.
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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