Tech Sell-Off, Bitcoin <$80K, PCE Deflator

Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Friday, Feb. 28.

State of Play

Stocks dropped again yesterday, led by tech. It was actually the worst sell-off of the week and makes for a pretty big intermittent drop for the Nasdaq 100 (QQQ 0.00%↑), which is down more than 7% since setting an all-time high on Feb. 19.

As we eye our board of indicators for signs of direction at 0530, it looks like the risk-off is going to continue:

• Cryptos have resumed their drop. Bitcoin is down 8% to drop below $80,000;

• Commodities are also a sea of red. Copper is down 1.4%. WTI crude oil is down 1% to trade around $69.50/barrel;

• Stock index futures are pointing to small gains, weirdly enough, with Nasdaq and S&P 500 up 0.3% each. That may be due to the early hour of today’s brieifing;

• Bonds are continuing to see bids, with the 10-year yield down 4 basis points to 4.24% (yields move inversely to prices).

Today’s Known Events

Personal Consumption Expenditures, aka the PCE Deflator, the Fed’s preferred inflation gauge, is out at 0830. This is a bit of a non-event seeing how it mostly just repeats what was in the Consumer Price Index a few weeks ago. But it could always deviate from from the CPI and give investors something new to focus on.

The numbers we’re looking for:

• Monthly headline CPI of 0.3% (versus 0.3% last month)

• Annualized headline CPI of 2.5% (2.6%)

• Monthly Core CPI of 0.3% (0.2%)

• Annualized Core CPI of 2.6% (2.8%)

Worth noting that these numbers are significantly lower than what we saw from the CPI, which was 0.5% headline and 0.4% core. Could these forecasts be too optimistic then?

Tech stocks are suddenly out of favor (by author via Grok AI)