Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Friday, June 21. The Bottom Line segment of today’s podcast starts at (3:38) for listeners who want to skip ahead. Be sure to check out the new ‘One Year Ago Today’ segment at the bottom of this page.
State of Play
Stocks got bounced around a bit yesterday after economic data gave further indications of slowing economic growth. The Nasdaq finished lower for the first time this week. As we look at our board of indicators at 0655, things are pretty quiet ahead of the first official weekend of summer:
Stock index futures are flat as a board with no movement at all to report;
Commodities are dropping again, or at least copper is, down 1.5%. WTI Crude oil is holding steady at $81/barrel;
Cryptos are moving downward, with Bitcoin off 3% to trade just below $64,000;
Bonds are seeing a few bids with the 2-year yield down 2 basis points to 4.71% whilst the 10-year is down 2bps to 4.23% (yields move inversely to prices).
Today’s Known Events
It’s triple-witching day, which means stock options, stock index futures, and stock index options expire at the close of trading today. This isn’t particularly unusual. It happens four times each year. It sometimes leads to heightened volatility in the previous trading days. That would certainly explain what happened yesterday. Otherwise it’s a bunch of hype and can be safely ignored.
We get purchasing manager indexes, or PMIs, from S&P at 0945. These come in two flavors: services and manufacturing. Services are expected to come in at 53.7, below the 54.8 seen last month. Manufacturing is expected to come in at 51.0 versus 51.3 at the last reading. There’s a consensus figure as well, which is just a combination of manufacturing and services.
We also get existing home sales at 1000. Housing starts yesterday showed an unexpected decline in May so worth keeping an eye on this. The number that’s anticipated is 4.08 million, which is only slightly below last month’s 4.14 million.
The Bottom Line©️
So far investors don’t seem particularly spooked by the softer economic data we’ve been getting. Perhaps for good reason as recent years have seen several ‘false positives’ when it comes to this data pointing to an incoming recession.
There was a notable shift yesterday, out of tech and into large caps. Let’s see if it has any kind of staying power, or if the AI party continues.
One Year Ago Today…
Bitcoin rallied after a number of mainstream Wall Street firms announced plans for spot Bitcoin ETFs (Daily Contrarian, June 21, 2023).
…and What Happened:
At the time Bitcoin was trading around $29,000, or less than half its value today. Not bad returns for a year! Almost as good as Nvidia (NVDA 0.00%↑) stock and several multiples of the S&P 500 performance over the last year, as the chart below illustrates:
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. The full portfolio is available upon request.
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).
Triple-Witching Day, PMIs