Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to to move markets. It is Wednesday, April 17. The Bottom Line segment of today’s podcast starts at (2:50) for listeners who want to skip ahead.
State of Play
Stocks finished roughly flat yesterday after selling off early in the session. Fed Chair Jerome Powell said what should have been obvious, which is that the Fed needs to see more progress on inflation before they can cut interest rates. Perhaps because it was obvious, markets didn’t react as much as they might have otherwise. Overnight, chipmaker ASML Holding (ASML 0.00%↑) reported earnings that fell short of forecasts and that stock is moving lower. As we look at our board of indicators at 0615 it looks like we could open higher:
Stock index futures are pointing to gains, led by small caps. The Russell 2000 is up 0.8% with Nasdaq and S&P 500 up 0.3% to 0.4%;
Commodities are mixed. WTI crude oil is moving lower, down 1% to trade around $84.50/barrel but copper is up 0.5% along with other industrial metals;
Bonds are unchanged. The 2-year yields 4.95% whilst the 10-year yields 4.64%.
Today’s Known Events
It’s a pretty quiet day. In terms of economic data the only noteworthy item is the Fed’s Beige Book, which isn’t even economic data per se but instead anecdotes on economic conditions from the Fed’s 12 districts. That’s out at 1400.
There are a few earnings. Travelers (TRV 0.00%↑), Prologis (PLD 0.00%↑) , and US Bancorp (USB 0.00%↑) report before the open at 0930. After the close things get a little more interesting with Las Vegas Sands (LVS 0.00%↑), Alcoa (AA 0.00%↑), Kinder Morgan (KMI 0.00%↑ ), CSX (CSX 0.00%↑), and Discover Financial Services (DFS 0.00%↑).
The Bottom Line©️
Maybe the market wasn’t in as much denial about interest rate cuts as was widely believed. It looks like there was widespread acceptance the Fed won’t be able to cut rates anytime soon, so to hear Powell say it was just confirmation. At least The Contrarian wasn’t the only one with this conviction. Perhaps the focus will return to earnings now if it won’t get stuck on geopolitics but things have been quiet there since the weekend.
On the topic of geopolitics — and other stuff — be sure to listen to the latest guest episode with Dr. Doug Greenig of Florin Court Capital. He’s a seasoned hedge fund manager and has some really interesting things to say about, well, a lot of stuff. This was recorded on Monday and is available for you premium subscribers exclusively right now.
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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A Few Earnings, Fed Beige Book