Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Tuesday, March 19. The Bottom Line segment of today’s podcast starts at (3:45) for listeners who want to skip ahead.
State of Play
Stocks closed higher yesterday but off of the highs, with most of the gains coming from tech. The Nvidia (NVDA 0.00%↑) announcement failed to impress and that stock is unchanged overnight. The Bank of Japan ended its negative interest rate and yield curve control policies and raised rates for the first time in 17 years. Even Japan, apparently, is experiencing inflation. As we look at our board of indicators at 0640, the major move once again is in cryptos:
Digital currencies are getting dumped across the board, with Bitcoin down 7% to trade around $63,000. Apparently this is caused by selling in Grayscale Bitcoin Trust (GBTC 0.00%↑) with outflows from that ETF hitting their highest level. Live by the ETF, die by the ETF…
Stock index futures are basically unchanged. Tech is the only one moving at all from the break-even point with the Nasdaq down 0.2%;
Commodities are moving lower, with copper off 1%. WTI crude oil is down 0.3% to drop below $82/barrel;
Bonds are seeing a few bids with the yield on the 2-year down 2 basis points to 4.71% and the 10-year down 2bps to 4.31% (yields move inversely to prices).
Today’s Known Events
Housing starts are the main economic data release of the day. Economists expect 1.44 million of these, up from 1.33 million seen last month. Building permits are expected to hold steady at 1.5 million. Yesterday’s NAHB Housing Market Index, meanwhile, came in ahead of expectations, showing the housing market back in expansion territory.
TenCent Music Entertainment (TME 0.00%↑) reported earnings earlier, beating on top- and bottom-line estimates. That stock is moving a bit higher in the pre-market.
The Bottom Line©️
So another day without much in terms of known events. That changes tomorrow with the Fed interest rate decision. In the meantime we have this crypto sell off to keep us entertained.
What to make of that? It could just be cryptos being cryptos (insert joke about stable form of exchange) or it could be something more ominous about investor risk appetite. It’s a bit ironic that the spot ETFs, which were supposed to usher in cryptos arrival to the mainstream, are leading to increased speculation — one of the things that is keeping cryptos from becoming mainstream.
Anyway, let’s see if this bleeds into other asset classes. We’ve seen how bitcoin specifically has been a leading indicator for stocks going up the last year or so. We may soon know if that holds true going down as well…
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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Housing Starts, Crypto Sell-Off