Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Monday, July 31.
State of Play
It’s a slow day but a busy week especially in terms of earnings. We did have some negative news out of China overnight, with PMIs showing a fourth straight month of contraction in the manufacturing sector. As of 0635 this morning nobody seems to care about these things:
Stock index futures are set to open roughly unchanged, with no major index moving more than 0.2% from the break-even point;
Commodities aren’t doing much either. WTI crude oil is up <1% to trade around $81/barrel. Copper is unchanged;
Bonds are unchanged. The 10-year yield is 3.98%.
Known Events
Nothing going on in terms of data releases here in the US. We do have a few earnings: SoFi (SOFI 0.00%↑) and onsemi (ON 0.00%↑) report before the open at 0930. After the close at 1600 we’ll hear from Avis Budget (CAR 0.00%↑), Diamondback Energy (FANG 0.00%↑), and YumChina (YUMC 0.00%↑), among others.
The Bottom Line©️
Today is slow but it’s a massive week in terms of earnings. The biggest day is probably Thursday with Apple (AAPL 0.00%↑) and Amazon (AMZN 0.00%↑) but tomorrow (Swiss National Day) and Wednesday are packed too. In terms of economic data releases, the highlight is undoubtedly non-farm payrolls on Friday.
Stocks have been going up, up, up. The S&P and Nasdaq are up 3% and 3.8%, respectively, for their fifth straight month of gains. The Russell 2000 which tracks small caps has done even better, up 6.5% on the month.
This all means we’re one day closer to a reversal. We probably won’t give back all of the gains from these last couple of months, at least not right away, but there will be another bear market again. Nobody knows exactly when of course, but if one is sitting on big gains in one’s stocks portfolio — especially long-term gains that have been held for a year or more — it may make sense to trim some of the winners and sock away the cash for when things get cheap again. Just remember that when they do, buying will be extremely unpopular. Even more unpopular than selling is now.
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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Earnings Season, a Hot July for Stocks