Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Tuesday, April 16. The Bottom Line segment of today’s podcast starts at (4:05) for listeners who want to skip ahead.
State of Play
Stocks dropped yesterday after retail sales came in well ahead of forecasts. Bonds were sold as well as investors perhaps start to come to terms with the fact that interest rate cuts will be delayed or canceled outright. As we look at our board of indicators at 0630, risk appears to once again be off the menu:
Stock index futures are pointing to a lower open, led by small caps. The Russell 2000 is down 0.9%. S&P 500 and Nasdaq futures are down about 0.3% each;
Commodities are moving lower. WTI crude oil is down 0.3% to trade around $85/barrel and copper is down 1.5%;
Cryptos, too, are dropping. Bitcoin is down 6% to trade around $62,500;
Bonds aren’t doing much. The 2-year yields 4.95% whilst the 10-year yields 4.65%.
Earnings
Johnson & Johnson (JNJ 0.00%↑) just reported a beat of earnings estimates while revenues were in line with expectations. That stock is moving a little lower in the pre-market. This of course after selling off over the last couple of weeks.
UnitedHealth (UNH 0.00%↑) beat on top- and bottom-line estimates and that stock is moving higher in the pre-market.
Bank of America (BAC 0.00%↑) and Morgan Stanley (MS 0.00%↑) are also due out before the open.
After the close at 1600 we’ll hear from United Airlines (UAL 0.00%↑), Interactive Brokers (IBKR 0.00%↑), and JB Hunt Transport Services (JBHT 0.00%↑), among others.
Economic Data
Housing starts are out at 0830. Economists who were surveyed expect 1.48 million housing starts, down from the 1.52 million seen last month. This may be lower than last month, but is still in the range where it has found itself for the last year or so.
Industrial production is out at 0915. The expectation here is for an increase of 0.4% month-over-month, an improvement over the 0.1% seen last month.
There are several Fed speakers today as well and the market may hang some hopes of rate cuts on them. But the data just doesn’t support this. Unless economic data in the US slows precipitously, and soon, it’s hard to see how the Fed can justify cutting interest rates. We’ve been saying that for months. It still holds.
The Bottom Line©️
Earnings didn’t help yesterday as hotter-than-anticipated retail sales and uncertainty over the middle east weighed on markets. To find out if geopolitical concerns are really driving things, look to the bond market. Investors are likely to seek out the relative safety of US fixed income in times of global uncertainty. Indeed we did see yields drop a bit after Israel said it would retaliate to Iran’s drone attacks over the weekend.
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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Earnings, Housing Starts