Good morning contrarians!
Stock futures are a bit higher as of 0635. Tech is leading things out with the Nasdaq up 0.4%. Small caps are up too, with the Russell 2000 about 0.2% higher. Dow Industrials and S&P 500 are flat. Commodities are rebounding, with copper and crude oil up more than 1%. Cryptocurrencies are down however, with bitcoin off about 2.5% to trade around 61,700.
This follows a day when the Federal Reserve surprised few people by announcing the start of bond purchase tapering. The comments by chair Jerome Powell were pretty dovish and stocks moved higher after the announcement to close at fresh records. The FOMC proceedings were live-blogged on the Discord server, which has more details on this.
The Bank of England releases its policy statement at 0800 and could increase interest rates. The whole thing is pretty complex but it’s relevant because the BoE would be the first major central bank to raise rates post-COVID.
Update: In a bit of a surprise, the BoE decided to keep rates unchanged.
In the U.S. today it’s mostly about earnings. We just had Cigna (CI) beat on top- and bottom-line and raise its outlook. Kellogg (K) reports before the open at 0930. Later we get Dropbox (DBX), Expedia (EXPE), Airbnb (ABNB), Shake Shack (SHAK), Square (SQ), Peloton (PTON), Viacom (VIAC), and Uber (UBER).
Seeing how it’s Thursday we also get initial jobless claims at 0830. Economists expect 275,000 new claims, which would be a fresh post-pandemic low.
Bottom Line
Some conflicting signals from tech and cryptos. The latter have become my preferred gauge for predicting risk appetite, leaving me a bit cautious on making a prediction. Probably earnings will carry the day. Those have mostly beaten estimates this quarter but past performance does not always predict future results. Guess I’m going to have to abstain from making a prediction again.
Yesterday’s bottom line: Predicted there would be a strong reaction one way or another to the Fed meeting and Powell presser. Indeed stocks shot up after the announcement after trading flat all day. Not going to take a ‘W’ from that because it’s a bit of a copout (though I did allow for the ‘L’ if stocks had finished roughly flat) so will mark this as an abstention.
Bottom line record: 4 wins, 1 loss, 2 abstentions.
BoE Rate Decision, Earnings: Daily Contrarian, Nov. 4