Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Monday, Oct. 16. The Bottom Line segment of today’s podcast starts at (2:21) for listeners who want to skip ahead.
State of Play
It was a relatively quiet weekend all things considered. As of 0630 all is pretty quiet:
Stock index futures are mixed. Small caps are pointing to a gain of 0.6%. S&P 500 futures are pointing to a smaller gain of 0.2%. The Nasdaq is flat;
Bonds are seeing a little bit of selling at the long end of the curve. The 10-year and 30-year yields are up 6 basis points each. The 10-year to 4.69%. The 2-year is up 2bps to 5.07% (yields move inversely to prices);
Commodities aren’t doing much. Copper is up 0.5%. WTI crude oil is unchanged at $86.40/barrel;
Cryptos are rallying, with Bitcoin up 3% to trade around $27,700.
Known Events
We get a bunch of earnings this week, but not much is on the calendar today:
Charles Schwab (SCHW 0.00%↑) reports before the open at 0930;
Empire State Manufacturing Index for October is out at 0830. Economists expect a decline of 7.0 after an increase of 1.0 last month;
Bond auctions at 1130: 3-month and 6-month bills,
The Bottom Line©️
The situation in the Middle East is obviously still a major concern. Then you have inflation and the Fed. Now a ‘third front’ is about to get open with earnings season. Eleven percent of S&P 500 companies report this week.
It’s a lot competing for investors’ attention. If one were to rank these, earnings would probably go first, with geopolitical and macroeconomic concerns more of a background issue. With the Middle East, the primary concern is a broader war. As long as it’s between Hamas/Hezbollah and Israel, investors can handle it just because they’ve seen that movie before. When it comes to inflation, the base case is that the Fed is not going to raise rates at the next meeting.
So if anything comes in to upset those equations — broader war in the Middle East, a more hawkish Fed — then those would move ahead of earnings in the whole equation.
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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Earnings Season