Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Monday, April 22. The Bottom Line segment of today’s podcast starts at (2:59) for listeners who want to skip ahead. Be sure to check out the brand new ‘One Year Ago Today’ segment at the bottom of this page.
State of Play
Stocks dropped on Friday with the Nasdaq seeing the worst of it. It turned out to be the worst week since 2022 for the Nasdaq. The weekend was quiet. As we look at our board of indicators at 0635, it’s a bit of a mixed bag that awaits us as trading gets underway:
Stock index futures are pointing to gains led by tech. The Nasdaq is up 0.8% with S&P 500 (SPY 0.00%↑) up about 0.6%. Worth pointing out that Tesla (TSLA 0.00%↑), which reports earnings tomorrow is down in the pre-market though not as much as Li Auto (LI 0.00%↑). This due to electric vehicle makers slashing prices;
The action in commodities is mostly in precious metals, which are dropping. Gold is down 1.7%, silver down 3.3%. WTI crude oil is down 0.5% to trade around $82/barrel whilst copper is up 0.6%;
Bonds are dropping. The 2-year yields is down 3 basis points to an even 5% whilst the 10-year is down 4bps to 4.66% (yields move inversely to prices);
Cryptos however are doing a-ok with Bitcoin up 2% to trade north of $66,000 which if one isn’t mistaken is the highest level in more than a week?
Today’s Known Events
A massive week of earnings awaits but today is relatively light in terms of known events. Really just a couple of earnings worth mentioning, with Verizon (VZ 0.00%↑) and Albertsons (ACI 0.00%↑) out before the open. After the close at 1600 we’ll hear from Cleveland Cliffs (CLF 0.00%↑), Nucor (NUE 0.00%↑), and SAP (SAP 0.00%↑).
The Bottom Line©️
Friendly reminder that during sell-offs and bear markets more generally futures often see a bounce before dropping during regular trading. The action in the bond market is certainly not looking like risk-on, but then cryptos are reflecting healthy risk appetite once again. Not sure what to make of the action in precious metals.
Is the sell-off done? Or will this week bring more of the same? The AI chip names are suddenly not so hot anymore. Then there’s Telsa, which looks like it is collapsing on itself, down ~40% this year. But for now those are outliers. Blue chip names are holding up okay, as are cryptos.
We could be in a holding pattern until the big-name earnings start to trickle in tomorrow. The aforementioned Tesla reports tomorrow after the close. Wednesday brings Meta (META 0.00%↑), Thursday Google (GOOG 0.00%↑) and Microsoft (MSFT 0.00%↑). Are we still doing the ‘Magnificent 7’ thing? If so, that’s four of them right there.
One Year Ago Today
There was some selling but not much in the way of broad-based fear (Daily Contrarian, April 21, 2023). Sound familiar?
Early May 2023 turned out to be an intermittent low for stocks, judging by the S&P 500. The SPY would flirt with those lows in November. Since then it’s been a steady climb upward — until this month, of course.
Could this mean we’re near another intermittent low? Sure, it could. We may be past peak fear already, just like we were a year ago. Of course, just as easily investors could decide to sell stocks. Any number of reasons for this. Nobody knows the future and past performance is not a guide to future results…
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
Please take the new readership/listenership survey right here in Substack! You will be entered into the drawing for a free Contrarian™️ coffee mug.
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.
A Massive Week for Earnings