Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Tuesday, Sept. 17. The Bottom Line segment of today’s podcast starts at (2:46) for listeners who want to skip ahead.
State of Play
Stocks were mixed yesterday, mostly higher, in a quiet trading session. As we eye our board of indicators for signs of direction at 0645, things are pretty quiet perhaps tilted to risk-on:
Stock index futures are pointing to gains led by tech. The Nasdaq is up 0.5% with S&P 500 futures up 0.3%;
Commodities aren’t doing much. WTI crude oil is effectively unchanged trading around $68.80/barrel. Copper is up 0.3%;
Bonds aren’t doing anything either. The 2-year yields 3.57% whilst the 10-year yields 3.62%;
Even cryptos are quiet, perhaps the clearest indication that risk-takers are on the sidelines ahead of the Fed meeting tomorrow. Bitcoin is trading around $59,000, unchanged.
Today’s Known Events
Retail sales are out at 0830. This is a crucial reading on the state of the US consumer. It typically trails employment data however. Still, this is probably the biggest economic data release of the week outside of the Fed tomorrow.
Economists who were surveyed expect headline retail sales to have decreased by 0.2% month-over-month in August after a rise of 1% the previous month. Core retail sales, which exclude automobiles are expected to come in at 0.2% MoM after printing at 0.4% previously.
We’ll also get industrial production at 0915. The number that is anticipated here is 0.1% MOM after a drop of 0.6% last month.
Retail inventories are expected to increase 0.4% MoM after a 0.3% last month. That number out at 1000.
The Bottom Line
Twenty-five or 50? That is the question heading into the Federal Reserve Open Market Committee meeting that starts today and concludes tomorrow. Fed fund futures are now pointing to a stronger likelihood (65%) of a 50bps rate cut. Is that maybe too ambitious? The Fed has not really communicated much in the way of the size of its cut, only that it is due to begin easing.
The other question of course is what happens after this meeting. The next meeting on Nov. 7 is right now pricing in a target rate that is 75bps below the current one. That would imply an additional 25bps cut after the 50 we’re presumably getting tomorrow.
Either way, you get the sense the market is feeling rather optimistic after a month of fear. Glad you bought the dip?
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.
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).
Retail Sales