Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Friday, June 7. The Bottom Line segment of today’s podcast starts at (5:14) 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
It’s Jobs Day which makes for a busy morning. Unexpectedly, GameStop (GME 0.00%↑) just reported disappointing first-quarter earnings. This was not supposed to happen until next week and it does seem to have dented enthusiasm for the stock, which is down a bit in the pre-market. As we look at our board of indicators at 0645, things are quiet outside of commoditiesland:
Commodities are getting bounced around. Copper has resumed its drop, down 2% this morning. Precious metals are dropping again as well, with gold down 1.5% and silver down 2.7%. WTI crude oil is holding steady close to $76/barrel
Stock index futures are unchanged with no major US index moving more than 0.2% from the break-even point;
Bonds are down a tiny bit with the 2-year yield up 2 basis points to 4.74% whilst the 10-year yield is up 2bps to 4.30% (yields move inversely to prices);
Cryptos are unchanged with Bitcoin changing hands around $71,300.
Today’s Known Events
Non-farm payrolls will command the lion’s share of attention today. Economists who were surveyed expect 186,000 new jobs, an increase over the 175,000 seen last month. This would keep the unemployment rate at 3.9%. Private payrolls are expected to increase 170,000 versus 167,000 last month with average hourly earnings growing at a steady 3.9% on a year-over-year basis, the same as last month.
Roaring Kitty is doing a livestream at 1200 on YouTube for all you meme stock bros. This is only interesting if he has a new position to unveil that is not a meme stock. And what are the chances of that, exactly? Not very large.
Finally you have the 10-for-1 Nvidia (NVDA 0.00%↑) stock split happening after the close at 1600. It’s too late to get in on this — you needed to be a holder of record as of yesterday’s close — and for all intents and purposes this does nothing but drop a zero from the company’s stock price. Still you can expect to hear a lot about this. There is surely something out there that can slow up Nvidia. What it is remains a mystery.
The Bottom Line©️
The drop in commodities is a little disconcerting especially where copper is concerned seeing how this is a proxy for economic growth globally. This has resurfaced as a concern this week and bears monitoring.
Where non-farm payrolls are concerned, these are closely watched but can easily turn into a non-event. It can be a pretty erratic report and if the number deviates too much from what was anticipated then investors will write it off as a one-off and carry on their merry way. So the number can’t be too good or too bad or the market will ignore it.
You really have to zoom out a bit to see if there is a broader trend. Doing so, you can clearly see that jobs are not being produced as plentifully as they were in 2021 and 2022:
Three of the last four months have been lower than the month before it and last month’s 175,000 was the fifth time in the last 10 months that the number has come in below 200k. We haven’t been below 100,000 since the darkest days of Covid. Might this be the month?
A miss of that magnitude would not be big enough to qualify as an outlier given that 186,000 are anticipated. If that happens the news hedlines would write themselves. It would likely move up expectations of a Fed rate cut, especially in light of cuts from the Bank of Canada and European Central Bank this week.
One Year Ago Today…
The S&P 500 (SPY 0.00%↑) was on the verge of entering a new bull market. “The market seems to want to move higher,” The Contrarian wrote (Daily Contrarian, June 7, 2023).
…and What Happened:
The S&P crossed 4,292, the level that corresponded to a 20% rise from the recent low and therefore a bull market, the following day. The market did indeed move higher for another six weeks, then started a descent that lasted until November. Over the last 12 months, the SPY chart is still quite pleasing to the eye:
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).
Non-Farm Payrolls, Roaring Kitty Livestream