Home Depot Consumer Caution

Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Tuesday, Aug. 13. The Bottom Line segment of today’s podcast starts at (3:07) and Stocks on the Contrarian Radar at (5:22) for listeners who want to skip ahead.

State of Play

Stocks did nothing yesterday. All was quiet except for a few individual names, which we’ll get to in a bit. As we look at our board of indicators for signs of direction at 0635, things are pretty quiet:

• Stock index futures are mixed, with the biggest move in small caps. The Russell 2000 is down 0.4%. This after dropping almost 1% yesterday. The Nasdaq is up 0.3% with S&P 500 futures up a little less;

• Commodities are taking a breather with WTI crude oil now holding steady at $80/barrel, which is higher than it’s been in weeks. Copper is down 0.5%;

• Cryptos aren’t doing anything with Bitcoin unchanged trading around $58,700;

• Bonds are flat. The 2-year yields 4.02% with the 10-year yielding 3.92%.

Today’s Known Events

We’ll kick things off with earnings:

• Home Depot (HD 0.00%↑) beat estimates but guided toward lower comparable sales due to “incremental pressure on consumer demand” and that stock is dropping in the pre-market (-3% at the time of this writing);

• Swiss sneaker manufacturer On Holding (ONON 0.00%↑) reaffirmed its outlook but that stock too is dropping, down 7% at the time of this writing;

• Sea Limited (SE 0.00%↑) earnings were mixed and that stock is down a bit in the pre-market.

Producer prices are out at 0830. This is a good leading indicator for inflation under the premise that producers pass higher costs off to consumers. Which is well and good, the only question is if anybody will actually care? As previously noted, inflation has moved to the backburner as a concern for investors. It’s now more about whether the economy can achieve that elusive soft landing.

But the numbers we’re anticipating:

• 0.2% month-over-month headline PPI, the same as last month

• 0.2% MoM Core PPI (excluding food and energy), versus 0.4% last month;

• 2.3% year-over-year headline PPI (2.6% last month);

• 2.7% YoY Core PPI (3.0%).