Earnings Season Arrives as JPMorgan, BlackRock Crush Estimates

Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Friday, Oct. 11. The Bottom Line segment of today’s podcast starts at (4:26) and Stocks on the Contrarian Radar©️ feat WBA 0.00%↑ at (6:59) for listeners who want to skip ahead.

State of Play

Stocks dropped a bit yesterday but finished off the lows. As we eye our board of indicators for signs of direction at 0700, there’s not an awful lot to go by quite yet:

• Stock index futures are a bit lower but bouncing after our first batch of earnings (more on that below). The Nasdaq is down 0.3%, barely enough to be statistically relevant;

• Commodities aren’t doing much either. WTRI crude oil is down <1% to trade around $75/barrel. Copper is up 0.5%;

• Bonds are unchanged. The 2-year yields 3.98% whilst the 10-year yields 4.10%. So the yield curve is uninverting, perhaps steepening?

• Cryptos are flat. Bitcoin is trading around $61,000.

Today’s Known Events

We are greeted with a trio of earnings from the financial sector:

• JPMorgan (JPM 0.00%↑) beat estimates and that stock is rising in the pre-market, up 2% at the time of this writing;

• Wells Fargo (WFC 0.00%↑) results were mixed, including a net loss on ‘repositioning of the investment securities portfolio’ (read: gambling trading) but also a modest decrease in loan loss provisions. The stock is down a bit, by about 1%, at the time of this writing;

• BlackRock (BLK 0.00%↑) crushed estimates, with net inflows setting a new record. So retail investors, for whatever reason, are trusting Blackrock with their assets. The stock is moving higher on this news, up 2% at the time of this writing.

Producer prices are out at 0830. Inflation may no longer be an immediate threat but it bears watching. Producer prices are more of a leading indicator than consumer prices under the premise that producers pass higher costs off to consumers. Economists expect an increase of just 0.1% month-over-month to headline PPI, down from 0.2% recorded last month. Core PPI, which excludes food and energy, is expected to print at 0.2% after 0.3% last month. That would leave annualized headline and Core PPI at 1.6% and 2.7%, respectively.

We also get the first reading of Michigan consumer sentiment at 1000. Economists expect a reading of 70.9, up from the 70.1 recorded last month.