Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Friday, Aug. 11.
State of Play
As of 0630 all is pretty quiet with the exception of Dr. Copper:
Stock index futures are effectively unchanged with no major US index moving more than 0.2% from the break-even point;
Commodities are mixed. Copper is down 1.4%, which is kind of a lot. That may be due to some subdued loan growth data out of China overnight. WTI crude oil is unchanged trading at $83/barrel;
Bonds are unchanged. The 2-year yields 4.82%. The 10-year 4.11%.
Known Events
Yesterday we had consumer prices, today it’s the turn of producers. Also known as wholesales prices, this is out at 0830. Economists expect an increase of 0.2% month-over-month to the headline figure, which is a small increase from the 0.1% MoM recorded last month. Core PPI, which excludes food and energy, is expected to come in at 0.2% MoM, also a small increase over 0.1% MoM seen last month. This would move the year-over-year headline figure up to 0.7% from 0.1% whilst Core PPI would drop to 2.3% YoY from 2.4%.
We also have the University of Michigan Consumer Sentiment reading out at 1000. There’s a bunch of numbers in here but what might be more important is what respondents say versus the numbers that emerge. But just to humor you, economists are expecting a reading of 71.0 for the main consumer sentiment reading, down a touch from the 71.6 recorded last month. Consumer expectations are also expected to drop a bit, from 68.3 to 68.0 whilst inflation expectations are slated to increase to 3.8% from 3.4%. That would show a consumer public still very much concerned about inflation.
The Bottom Line©️
None of the PPI figures expected are particularly onerous and seeing how this indicator, like the CPI, usually prints very close to where economists figured it means it could be a non-event. See yesterday’s CPI.
That leaves us pondering the subdued risk appetite from investors, which is now in its second straight week — and what might change that. Major indexes are due for another week of losses and it’s kind of hard to see where a catalyst for more buying will come from. Yesterday’s CPI should have been the type of thing to bring buyers out and it did for a few hours but we finished only modestly higher.
Retailer earnings next week should do something, though that ‘something’ could of course be to scare investors. It’s a quiet week for economic data releases. Then the August doldrums set in for real. Is there even a Jackson Hole this year? If so, will anybody be paying attention?
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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Producer Prices, Searching for a Catalyst