Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Thursday, March 14. The Bottom Line segment of today’s podcast starts at (4:28) for listeners who want to skip ahead.
State of Play
Stocks traded mostly sideways yesterday in an uneventful session. As we look at our board of indicators at 0635, things are pretty quiet, perhaps leaning to risk on:
Stock index futures are pointing to a higher open, led by tech. The Nasdaq is up 0.5% with S&P 500 (SPY 0.00%↑) futures up just a little less;
Commodities are mixed. WTI crude oil is up 1% to trade north of $80/barrel for the first time in weeks (months?) whilst copper is down 0.4%;
Cryptos are taking a breather, with Bitcoin unchanged at $73,200, just a bit below the latest all-time high of $73,700 set a couple of days ago;
Bonds aren’t doing anything. The 2-year yield is 4.63% whilst the 10-year yields 4.20%. The last couple of days have seen a sell-off in the 10-year, which was down around 4.04% on March 8 (yields move inversely to prices).
Economic Data
Things get a little more interesting today. A dump of economic data awaits at 0830.
Retail sales: Economists expect an increase of 0.8% month-over-month, a substantial improvement over the -0.8% seen last month. Core retail sales, which exclude automobiles, are expected to rise by 0.5% MoM after dropping by 0.6% last month.
At the same time as retail sales we’ll also get producer prices. The expectation here is for an increase of 0.3% MoM to the headline PPI, the same as last month. That would move the annualized rate up to 1.1% from 0.9%.
Core PPI, which excludes food and energy, is expected to increase by 0.2% MoM, which is an improvement over the 0.5% seen last month. That would drop the annualized Core PPI to 1.9% from 2.0%.
Finally seeing how it’s Thursday we’ll get initial jobless claims at the same time. The expectation here is for 218,000 new claims, effectively identical to the 217,000 seen last week and ahead of the four-week average of 212,000.
Earnings
Weibo (WB 0.00%↑) earlier reported mixed results but the stock is rallying in the pre-market, up 7%.
Dollar General (DG 0.00%↑), Dick’s Sporting Goods (DKS 0.00%↑), Futu Holdings (FUTU 0.00%↑), and Build-A-Bear Workshop (BBW 0.00%↑) also report before the open at 0930.
After the close at 1600 we’ll hear from Adobe (ADBE 0.00%↑) and Ulta Beauty (ULTA 0.00%↑).
The Bottom Line©️
You hopefully don’t need to be told how crucial the US consumer is to the health of the global economy. As long as Americans keep buying (stuff they don’t need), the global economy can keep humming. That makes today’s retail sales print quite crucial. If you’ve been anywhere near a shopping mall or airport this last month, it certainly looks like Americans are still out there spending money like drunken sailors. But that’s anecdotal. The data today will tell us for sure.
If retail sales somehow do come in soft then it may actually be seen as a good thing by the market, under the premise that it will increase the likelihood that Fed interest rate cuts are coming — to the extent that the market still cares about the Fed or inflation, that is.
The reaction to Tuesday’s CPI certainly doesn’t look like there’s much concern there. Maybe the PPI will produce a market reaction. It’s arguably the more important reading anyway, under the premise that producers simply pass higher costs off to consumers.
On the topic of higher prices, The Contrarian just got back from Switzerland — just kidding, not going to get into that again. But just in case you missed it the first time: here is the direct link to the text and below to the full pod:
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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Retail Sales, Producer Prices