Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Monday, Nov. 6. The Bottom Line segment of today’s podcast starts at (3:02) for listeners who want to skip ahead.
State of Play
Friday saw another big rally on Wall Street and nothing happened over the weekend to change the new bullish narrative that emerged with last week’s Fed meeting. As of 0630, it looks like this could all be due to continue:
Stock index futures are pointing to gains, with Nasdaq and S&P 500 both up about 0.2%;
Commodities are gaining ground with copper up 1% and WTI crude oil up 1.7% to trade around $82/barrel;
Bonds are seeing a little bit of selling, with the yield on the 2-year up 4 basis points to 4.87% whilst the 10-year yield is also up 4bps to 4.60% (yields move inversely to prices).
Known Events
It’s another big week for earnings. Most of the action will be a little later in the week but for today we have Berkshire Hathaway (BRK.B), Dish Network (DISH 0.00%↑), Brookfield Asset Management (BAM 0.00%↑), and Freshpet (FRPT 0.00%↑) before the open at 0930.
After the close we’ll hear from Realty Income (O 0.00%↑), NXP Semiconductors (NXPI 0.00%↑), Hims & Hers Health (HIMS 0.00%↑), and Trip Advisor (TRIP 0.00%↑), among others.
Fed Governor Lisa Cook speaks today, about financial stability at Duke University. That will be broadcast live for those who want to follow. Cook is a full-fledged FOMC voting member. It’s a big week for Fed speakers, with Jay Powell himself up on Wednesday.
Later tonight China reports its balance of trade. The trade surplus is actually expected to increase slightly, even though exports and imports are both expected to drop. That number is out at 2200.
The Bottom Line
It really does look like this rally has some staying power. Last week was the best one of the year for stocks and psychologically you get a sense that a lot of fear has been removed from the system. It can (and will) still resurface of course, but that’s where we’re at. Famous last words? Well, maybe.
One question is if Powell & Co walk back the dovish message from last week. To recap: it wasn’t overtly dovish, but Powell said for the first time that risks were “balanced,” which was good enough for investors to set us on our way. But Powell chooses his words carefully and the other Fed speakers coming in to the meeting were far more dovish. We’ll have to hope the inflation data plays along, but we don’t get any of that this week.
That leaves earnings as the major driver. These haven’t all been good so this is certainly something to pay attention to — especially with the economically sensitive companies.
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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Earnings, China Trade Balance