Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Monday, Oct. 23. The Bottom Line segment of today’s podcast starts at (3:40) for listeners who want to skip ahead.
State of Play
As of 0635 we are looking at risk-off almost everywhere:
Stock index futures are down, led by tech and small caps with the Nasdaq and Russell 2000 down 0.7% each. S&P 500 futures are off 0.6%;
Bonds are seeing renewed selling pressure. The 10-year yield is up 9 basis points to 5.02% whilst the 2-year yield is up 5bps to 5.13% (yields move inversely to prices)
Commodities are dropping. Copper and WTI crude oil both down 0.5%;
Cryptos are the one outlier. Bitcoin is up 2% to trade around $30,500.
Known Events
There’s very little on the calendar today. Chicago Fed reports activity at 0745, a couple of bond auctions, and that’s it on the economic front.
A few regional banks report earnings before the open at 0930, including Bank of Hawaii (BOH 0.00%↑), Bank of Marin (BMRC 0.00%↑), HBT Financial (HBT 0.00%↑), and Hope Bancorp (HOPE 0.00%↑).
After the close at 1600 we’ll hear from Cleveland-Cliffs (CLF 0.00%↑) and Logitech International (LOGI 0.00%↑), among others.
The Bottom Line©️
It doesn’t look like there was any actual news overnight to blame for this latest bout of selling. That means it’s just more ‘higher for longer’ fears. This has been the pattern for over a week and it intensified after Jerome Powell’s remarks on Thursday. None of this should be a surprise as the Fed chair has been quite consistent with his message that price stability (read: inflation) is the priority and the Fed isn’t ready to think about thinking about cutting rates. There was some noise that the bond market might be doing the Fed’s work for it. Now that looks like just another of those ‘Fed Pivot Hope-ium’ things that went up in smoke.
Four of the ‘magnificent seven’ technology companies report earnings this week. Microsoft (MSFT 0.00%↑) and Google (GOOG 0.00%↑) lead things off tomorrow. Then it’s Meta (META 0.00%↑) on Wednesday, and Amazon (AMZN 0.00%↑) on Thursday. (For reference the other three ‘magnificent seven’ are Tesla (TSLA 0.00%↑), which reported last week, Apple (AAPL 0.00%↑), which reports next week, and Nvidia (NVDA 0.00%↑), which reports later in November).
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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Big Tech Earnings Week: 4 of ‘Magnificent 7’ Report