Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Tuesday, Nov. 28. The Bottom Line segment of today’s podcast starts at (3:56) for listeners who want to skip ahead.
State of Play
Stocks dropped a bit yesterday in a quiet session, just as had been anticipated in this space. As we look at our board of indicators at 0630, things are very quiet:
Stock index futures are flat as a board, with no major index moving more than 0.1% from the break-even point;
Commodities are showing a few signs of life, with WTI crude oil up 1% to trade around $75.50/barrel with copper up 0.2%;
Bonds are unchanged. The 2-year yield is 4.88%. The 10-year 4.39%, both lower than yesterday (yields move inversely to prices).
Known Events
A couple of earnings to tell you about this morning. Pinduoduo (PDD 0.00%↑) just beat top- and bottom-line estimates and that stock is rallying in the pre-market, up 12%. That is the biggest name reporting before the open at 0930.
After the close we’ll hear from Crowdstrike (CRWD 0.00%↑), Workday (WDAY 0.00%↑), Intuit (INTU 0.00%↑), Splunk (SPLK 0.00%↑), Hewlett Packard Enterprises (HPE 0.00%↑), and NetApp (NTAP 0.00%↑), among others.
It’s a pretty busy day for economic events. Case-Shiller home prices for September are up first, at 0900. The 20-city index, the most closely followed of Case-Shiller’s indexes, is expected to increase by 4.2% year-over-year, a marked improvement over the 2.2% seen the previous month.
We then get the Conference Board’s consumer confidence reading at 1000. A reading of 101 is expected, less than the 102.6 seen a month ago. For point of reference, the highest reading this cycle was 129.1 recorded in July 2021 whilst during the dark days of Covid we saw numbers as low as the mid-80s.
There are also several Fed speakers on today’s agenda:
Chicago Fed President Austan Goolsbee is giving opening remarks at an agriculture conference at 1000;
Fed Governor Chris Waller is participating in a discussion on the economic outlook at an American Enterprise Institute event, also at 1000;
Fed Governor Michelle Bowman is doing some special breakfast out in Utah, apparently at 1045;
The Bottom Line©️
So a busy day that should result in more action than yesterday’s snooze session. The CB consumer confidence thing will likely get a lot of attention, but it’s mainly a debate about decimal points as it’s no secret the consumer is very healthy. The latest Black Friday/Cyber Monday data is quite encouraging, with Salesforce predicting high single digit percentage growth globally (not just in the US. Assume those numbers are year-over-year).
Home prices are summarily ignored by the market. Earnings could supply some surprises but the interesting ones aren’t until after the close. That leaves Fed speakers. This has maybe the biggest potential to upend all the good cheer that’s been building this month. All you need is one speaker to say something that hints at ‘higher for longer’ and the stock market will likely sell off.
It doesn’t seem terribly likely for such an event to come to pass as the Fed has been pretty consistent with its ‘balanced risks’ talk, though Jay Powell did manage to spook the market a few weeks ago. It quickly recovered, which leads one to conclude that if there is a Fed-inspired sell-off today it isn’t likely to last long…
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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Consumer Confidence, Home Prices, Fed Speakers