Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Monday, June 3. The Bottom Line segment of today’s podcast starts at (3:42) for listeners who want to skip ahead. Be sure to check out the new ‘One Year Ago Today’ segment at the bottom of this page.
State of Play
Roaring Kitty is back! Posted another cryptic meme last night and accompanying Reddit post revealing a large position in GameStop (GME 0.00%↑) that caused those shares and other meme stocks to surge overnight. As we look at our board of indicators at 0645, risk appetite appears healthy:
Stock index futures are pointing to a higher open led by small caps. The Russell 2000 is up 0.9% with Nasdaq 100 (QQQ 0.00%↑) futures up 0.5% and S&P 500 (SPY 0.00%↑) futures 0.2% to the good;
All is quiet in commoditiesland, with WTI crude oil down 0.2% to trade around $77/barrel. Copper is up 0.7%;
Cryptos are gaining ground with Bitcoin up 2% to trade north of $69,000. The biggest move in cryptoland was from the GameStop memecoin, which has more than quadrupled overnight;
Bonds are seeing a few bids with the yield on the 2-year down 3 basis points to 4.87% whilst the 10-year yield is down 4bps to 4.47% (yields move inversely to prices).
Today’s Known Events
ISM Manufacturing PMIs are out at 1000. This is the second reading which would normally not warrant our attention. But the report includes manufacturing prices, which were not in the flash reading. Economists who were surveyed expect this figure to print at an even 60.0, which is a tad below the 60.9 recorded last month. As this is a key input to inflation — at least wholesale inflation, which ultimately will be passed on to consumers — it is worth watching.
At the same time we’ll get construction spending for April at 1000. The expectation here is for an increase of 0.2% month-over-month, an improvement over the 0.2% decline recorded for the previous month. This can be a good gauge of housing construction in particular, which is a decent bellwether for US economic growth.
We’ll also get vehicle sales at 1000. The expectation here is for 15.8 million transactions, effectively in line with the 15.74 million recorded the previous month.
The Bottom Line©️
The main event this week isn’t until Friday with non-farm payrolls. We do have several earnings before then, though nothing particularly groundbreaking — Crowdstrike (CRWD 0.00%↑), Lululemon (LULU 0.00%↑), and DollarTree (DLTR 0.00%↑) are highlights. Also JOLTS tomorrow.
It’s a pretty slow start to the week, which will allow Roaring Kitty and meme stock bros to have the floor. This should make for a bullish Monday. Obviously if you weren’t long these meme names before, it’s too late to do so now. But really you should know better than to even think about speculating in meme stocks, much less meme coins. Right?
One Year Ago Today…
The Contrarian thought he spotted an opportunity in value stocks, which had started the year a lot worse than their tech brethren (Daily Contrarian, June 2, 2023).
…and What Happened:
Value stocks have continued to underperform not just tech, as measured by the Nasdaq 100 Index (QQQ 0.00%↑) but also the broader S&P 500 Index (SPY 0.00%↑), as the chart below illustrates:
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
This Substack chat tracks The Contrarian’s trades in (almost) real time. The full portfolio is available upon request.
If this daily thing is drowning your inbox and/or you CBF to bother with it and prefer to just get the guest feature or actionable highlights — you can control these settings on your account page.
Finally, if you enjoy this and want others to experience it, please gift a subscription to your friends (or even your enemies).
Share this post