Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Thursday, June 12, 2025.
State of Play
Stocks closed a little lower yesterday, despite a softer-than-anticipated CPI and proclamation by President Trump of a trade deal agreement with China. There were additional concerns about tensions between the US and Iran. As we eye or board of indicators for signs of direction at 0645 ET, things seem on edge a little bit. Trump’s latest comments, that unilateral tariffs would be imposed within weeks is weighing on things:
Perhaps the most important move is in commodities specifically oil: WTI crude oil is down 1.5% to trade around $67/barrel. That can be seen as an indicator that fears over Middle East tensions are abating. But then gold is rallying, up 1.8%. Copper is caught in the middle, roughly unchanged;
Stock index futures are pointed a bit lower. This is mostly seen in small caps with the Russell 2000 down 0.7%. S&P 500 and Nasdaq are down 0.4% each;
Bonds are seeing some bids. The 10-year yield is down 3 basis points to 4.38% (yields move inversely to prices);
Cryptos are dropping. Bitcoin is down <2% to trade around $107,300.
Add it all up and most indicators are pointing to risk-off.
Today’s Known Events
Yesterday we had consumer prices, today it’s the turn of producers. The Producer Price Index prints at 0830. This can be seen as a leading indicator of consumer prices under the pretext that producers pass higher costs off to consumers. The numbers anticipated by a survey of economists:
Month-over-month headline PPI of 0.2%, after a decline of 0.5% last month;
Year-over-year headline PPI of 2.6% (2.4% last month);
MoM Core PPI of 0.3% (-0.4%);
YoY Core PPI of 3.1% (3.1%).
Seeing how it’s Thursday we’ll get initial jobless claims at 0830 as well. These have been ticking up, with three straight increases. The expectation for this week is 242,000 new claims, which would be a drop from 247k recorded last week but still north of the four-week average of 235k.
There’s a 30-year bond auction at 1300. The last one of these produced a yield of 4.82%.
The Bottom Line
Our assessment yesterday that stocks would rally if the CPI came in soft turns out to have been misguided. In our defense, this China deal weighed on sentiment as do developments in the Middle East. For today, the latest tariff uncertainty introduced by Trump seems to be weighing on things.
Producer prices could have an impact but the sad reality is that the market tends to ignore this figure. The simple reason is that its record as a leading indicator is mixed. There are a number of reasons for this, perhaps most notably that things like healthcare and rent are not included in the PPI but factor heavily into the CPI. To wit, last month’s (much) softer than anticipated PPI only produced a modest rally in stocks. In fact, the Nasdaq dropped a bit that day.
Ultimately, the moves we’ve seen over the last 24 hours are not particularly dramatic. Certainly not compared to the volatility we saw in April. One would think that is a positive indicator where investor risk appetite is concerned.
PSA: The Contrarian will likely take tomorrow (Friday, June 13) off. Not because of the date but because there isn’t anything interesting on the calendar. If there are major developments today that warrant our attention he will do a briefing however.
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
Read this month’s portfolio update letter here. The Substack chat tracks The Contrarian’s trades in (almost) real time.
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