Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Tuesday, Nov. 7. The Bottom Line segment of today’s podcast starts at (5:03) for listeners who want to skip ahead.
State of Play
Stocks eked out a gain yesterday, with the exception of small caps. Overnight, the company WeWork (WE 0.00%↑) filed for bankruptcy in a move that was widely anticipated. China’s trade balance showed a shrinking of exports but an unexpected increase of imports. As of 0635 that is all weighing on risk sentiment somewhat:
Stock index futures are pointing to a slightly lower open, with Nasdaq and S&P 500 down 0.3% each;
Commodities are moving lower, with copper down 1.5% and WTI crude oil down 1.5% to trade around $79.50/barrel;
Bonds are seeing a few bids, which tells us that whatever is weighing on markets is not Fed-related: The 2-year yield is down 3 basis points to 4.91% whilst the 10-year is down 5bps to 4.61% (yields move inversely to prices).
Known Events
First up, earnings: Uber (UBER 0.00%↑), Celsius Holdings (CELH 0.00%↑), DataDog (DDOG 0.00%↑), and Planet Fitness (PLNT 0.00%↑) report before the open at 0930.
After the close we’ll hear from Rivian (RIVN 0.00%↑), EBay (EBAY 0.00%↑), Upstart Holdings (UPST 0.00%↑), Devon Energy (DVN 0.00%↑), Occidental Petroleum (OXY 0.00%↑), Robinhood (HOOD 0.00%↑), and Toast (TOST 0.00%↑).
The US trade balance is out at 0830. Economists expect a slightly larger trade deficit of $60 billion over the $58 billion seen last month. This would generally be good for the world economy as Americans are the world’s largest consumer group and if the US is importing more stuff it means its citizens are buying more stuff, including (mostly?) stuff they don’t need.
Then we have a bunch of Fed speakers. Vice Chair for Supervision Michael Barr is up first, at 0915, speaking at a technology conference in DC. That will be broadcast live on YouTube.
Fed Governor Chris Waller speaks at a St. Louis Fed event at 1000. That too will be broadcast on YouTube.
Several Fed officials speak at the ‘Energy and the Economy’ conference hosted by the Kansas City Fed. The most notable is Dallas Fed President Lorie Logan, a full FOMC voting member this year.
The Bottom Line
Just when it felt like a sense of calm was returning, we got the WeWork news. It was widely anticipated but still drives home the fact that the commercial real estate market, specifically office buildings, is likely still facing a reckoning. Then we have China. The fact that their exports are dropping this much either doesn’t speak well for the global economy (less demand for Chinese manufacturing) or means the world has simply come to depend less on Chinese goods. Why the imports are up is a bit of a mystery. It could be China’s long-awaited consumers finally stepping up. Or the numbers could be embellished or manufactured outright by Chinese authorities.
These concerns aside, Fed speakers and earnings will likely be the drivers today. As mentioned yesterday, it’s difficult to see how the Fed can walk back Jay Powell’s “balanced” comments, though some speakers may try — and the market may react.
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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Fed Speakers, Earnings