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Durable Goods Orders, Initial Jobless Claims
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Durable Goods Orders, Initial Jobless Claims

What to make of Nvidia earnings? NVDA beat estimates across the board but the stock weirdly sold off after hours…
Transcript

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Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Wednesday, Nov. 22. The Bottom Line segment of today’s podcast starts at (4:08) for listeners who want to skip ahead.

State of Play

Stocks gave up a little ground yesterday as earnings weighed on sentiment. After the close Nvidia (NVDA 0.00%↑) beat analyst expectations across the board but the stock weirdly sank in the aftermarket. It has since recovered and is now about unchanged since yesterday’s close. As we look at our board of indicators at 0635, a little bit of risk-on appears to be emerging:

  • Stock index futures are pointing to gains led by small caps, with the Russell 2000 up 0.5%. S&P 500 and Nasdaq are up about 0.2% and 0.3%, respectively;

  • Bonds are seeing a few bids, with the yield on the 10-year down 5 basis points to 4.37% and the 2-year down just 1bps to 4.87% (yields move inversely to prices). So the yield curve is widening again, whatever that means at this stage of the cycle;

  • Commodities are dropping a bit, with WTI crude oil down 1.3% to trade below $77/barrel again. Copper is down 0.5%;

  • Cryptos are selling off a bit, with Bitcoin down 2% to trade around $36,500.

Known Events

It’s a busy morning as government agencies scramble to release data before the Thanksgiving holiday. First, one earnings announcement to tell you about:

Deere (DE 0.00%↑) just beat on top- and bottom-line estimates but lowered guidance and that stock is selling off in the pre-market. That’s the only earnings release of interest today.

Durable goods orders are up at 0830. Economists expect a drop of 3.2% month-over-month, after an increase of 4.7% last month. There may be a seasonal component at work here.

We get initial jobless claims at 0830 as well. The expectation here is for 225,000 new claims, down from the 231,000 seen last week but ahead of the four-week average of ~220,000.

Finally the University of Michigan’s consumer sentiment report is out at 1000 but this is the second one that will likely just confirm the information that was in the first one back on Nov. 10.

The Bottom Line©️

The NVDA reaction was weird. The Contrarian can’t remember seeing a company beat analyst estimates across the board to only sell off. But it has since recovered so maybe investors were just looking for an excuse to take profits. Or maybe for whatever reason they were expecting an even bigger beat.

Things may be quiet today. Initial jobless claims could cause people to take notice but it seems everybody is already on the road for Thanksgiving. On that note, enjoy the holiday if you’re in the US. We’ll be back here again on Monday.

Housekeeping

  • Obviously this is not investment advice (duh). Do your own research, make your own decisions.

  • There will be no briefing or podcast tomorrow (Thanksgiving) as markets are closed in the US, or on Friday as markets are open for a half day but nothing is likely to happen.

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The daily podcast discusses the major market activity and economic data release schedule for the day ahead, with a contrarian bent. Also includes regular podcast episodes a day (or more) early and without ads or announcements.