Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Friday, April 19. The Bottom Line segment of today’s podcast starts at (3:11) for listeners who want to skip ahead. Be sure to check out the brand new ‘One Year Ago Today’ segment at the bottom of this page.
Today’s briefing is brought to you by our new partners HXResearch. Read more about them below.
State of Play
Stocks dropped again yesterday, the fifth straight day this happened for the S&P 500 (SPY 0.00%↑). After the close Netflix (NFLX 0.00%↑) beat estimates but said it would stop reporting paid memberships next year, which weighed on the stock overnight. We then had Israel strike Iran, which briefly caused markets to spiral before news that the attacks had been limited caused things to stabilize. As we look at our board of indicators at 0645, things are a bit all over the place:
Stock index futures are pointing to a lower open, with the Nasdaq down 0.7% and S&P down 0.4%;
Cryptos are rebounding however, with Bitcoin up 5% to trade around $64,500. Is this the halving people were talking about?
Bonds are seeing a few bids, with the 2-year yield down 4 basis points to 4.95% whilst the 10-year is down 7bps to 4.58% (yields move inversely to prices);
Commodities appear to be taking a breather. WTI crude oil is down 0.5% to trade around $82/barrel after spiking upward on news of the attacks last night. Copper is up 0.7%.
Today’s Known Events
Some earnings today. American Express (AXP 0.00%↑) earnings beat estimates whilst revenues were in-line with expectations and that stock is moving a little higher in the pre-market. Procter & Gamble (PG 0.00%↑) beat EPS estimates but fell short of revenues. No reaction from the market yet. SLB (SLB 0.00%↑) saw earnings and revenues come in pretty much in line with estimates and that stock is down a bit.
That’s it. Nothing else happening today other than probably more obsessing about the Middle East.
The Bottom Line©️
It’s been a pretty awful week. The worst for the S&P since October. The Nasdaq has actually done worse, down 3.5% for the week (the SPY is down ‘just’ 2% at the time of this writing). Hard to see how today’s earnings will change that narrative.
If a higher-for-longer Fed is what’s driving this (and bond yields do bear that out, this morning’s move notwithstanding) then it may not spell the end of the bull market — provided, of course, that the economy keeps growing. The retail sales we got this week were certainly a good sign on that front. Copper prices kind of tell the same story. If investors are nervous about the Fed, then positive economic news — and more importantly earnings — should override that in time.
Geopolitics is just going to geopolitics. The tit-for-tat between Israel and Iran appears to be just that, as reflected in oil prices. Doesn’t mean it won’t escalate again but for now it doesn’t look like there is much of a risk of a broader regional conflict — that’s how financial markets are pricing this, at least. If you think you’re smarter than that, then gold and oil are probably good ways to take advantage.
HX Research & HX Daily
We started the Contrarian Investor Podcast five years ago with the goal of sharing some of the knowledge and insight from investors we were meeting during the course of doing our own work.
We feel very lucky to have had many great guests through the years and to be able to share their wisdom.
As we continue to grow and evolve our business, we are going to try some new content formats. One of those is going to begin to do some collaboration content with some of our guests.
Our first collaboration is with Enrique Abeyta – the Founder, CEO and Editor-in-Chief of HX Research. Enrique has had a thirty year career on Wall Street as an investor and entrepreneur. He is also the very rare newsletter writer who has personally managed billions of dollars for clients. You can read about his background here.
He recently joined us on the podcast and we put our heads together and came up with an idea for a collaboration piece of content. He features us in today’s daily!
We are subscribers to Enrique’s free daily newsletter and think you should check it out also! You can subscribe here.
One Year Ago Today
The market was struggling for direction after poor earnings results for Netflix and reports of Tesla (TSLA 0.00%↑) cutting prices (Daily Contrarian, April 19, 2023).
Tesla would recover but that only lasted until the new year. TSLA now finds itself right back at the level from one year ago as the chart illustrates:
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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Iran-Israel Tit-for-Tat, Earnings