Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Friday, Aug. 2. The Bottom Line segment of today’s podcast starts at (4:27), ‘Stocks on the Contrarian Radar’ at (7:38) for listeners who want to skip ahead.
State of Play
Yesterday was an ugly one on Wall Street. Stocks dropped across the board, with the most risk-sensitive names (growth and small caps) hit the hardest. The bad news continued after the close as Intel (INTC 0.00%↑) earnings were downright horrific. The company suspended its dividend and said it would cut 15% of its workforce in an effort to contain costs. The stock appears to be in complete free fall. Amazon (AMZN 0.00%↑) for its part posted mixed results, which was excuse enough for investors to dump the stock overnight.
As we look at our board of indicators for signs of direction at 0645, things are not looking great:
Stock index futures are pointing to further losses, led by small caps. The Russell 2000 is down 2.2%. Nasdaq futures are down 1.6% with the S&P 500 down 1.1%;
Bonds are continuing to rally, making this look very much like classic risk-off. The 2-year yield is down 5 basis points to 4.12% whilst the 10-year is down another 4bps to 3.93%. Both are now at lows for the year;
Cryptos are weirdly unchanged, with Bitcoin trading around $64,500. Remember cryptos can be a leading indicator for stocks…
Commodities are mixed. WTI crude oil is unchanged at $76.50/barrel. Copper is encouragingly up 0.9%. Gold and silver are up 1% and 2%, respectively.
Today’s Known Events
Non-Farm Payrolls are the main event today. Economists who were surveyed expect 176,000 new jobs, down from the 205,000 recorded last month, which would leave the unemployment rate unchanged at 4.1%.
There are some earnings as well. We spoke about oil majors yesterday. Today they (the US oil majors that is) just reported earnings:
Exxon Mobil (XOM 0.00%↑) beat top- and bottom-line estimates but that stock is moving a bit lower anyway;
Chevron (CVX 0.00%↑) earnings were mixed and that stock is down 2% in the pre-market. The merger with Hess (HES 0.00%↑) is also affecting things;
Church & Dwight (CHD 0.00%↑), not an oil major but a consumer staples producer that quietly had a good day yesterday (along with its peers as the XLP 0.00%↑ ETF gained almost 1% on the day) , is also due before the open at 0930.
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