Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Thursday, Dec. 14. The Bottom Line segment of today’s podcast starts at (3:55) for listeners who want to skip ahead.
State of Play
Santa has arrived! Stocks put in a major rally after the Fed meeting yesterday. It was a broad-based rally across asset classes, spurred on by an expectation that looser monetary policies are on the way. We’ll get into all that later. For now, as we look at our board of indicators at 0630, it looks like the party is set to continue:
Stock index futures are pointing to further gains, led by small caps (usually a good sign). The Russell 2000 is up 1% in the pre-market. S&P 500 and Nasdaq are up about 0.3% each;
The rally in bonds was perhaps most dramatic yesterday and that is continuing this morning. The 2-year yield is down another 16 basis points to trade around 4.32% whilst the 10-year yield is down 9bps to 3.95% (yields move inversely to prices). That’s the first time the 10-year has moved below 4% since June.
Commodities are rallying across the board. WTI crude oil is up 2% to trade close to $71/barrel whilst copper is up 2.7%. Then you have gold up 2.6% to trade around $2,050/oz and silver up 6%;
Cryptocurrencies too are going along for the ride, with Bitcoin up 5% to trade around $43,000.
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