Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Wednesday, Sept. 25. The Bottom Line segment of today’s podcast starts at (1:18) and Stocks on the Contrarian Radar©️ at (2:25) for listeners who want to skip ahead.
State of Play
As we eye our board of indicators for signs of direction at 0650, things are very quiet:
Stock index futures are flat with no major US index moving more than 0.2% from the break-even point;
Commodities aren’t doing anything either. WTI crude oil is down 0.8% to trade around $71/barrel. Copper is down 0.5%;
Even cryptos are quiet, with Bitcoin changing hands at $63,600, unchanged;
Bonds are also flat. The 2-year yields 3.54% whilst the 10-year yields 3.76%, both effectively unchanged from yesterday.
Today’s Known Events
Micron (MU 0.00%↑) earnings are the main event of the day, but that doesn’t happen until after the close at 1600.
We’ll get new home sales at 1000. Economists who were surveyed expect 700,000 new transactions, down a bit from the 740,000 recorded last month.
That’s all we got. Another boring day.
The Bottom Line
This is shaping up to be the most boring week of the year for stocks. There just isn’t any real movement. The S&P did close at a fresh record high yesterday, but it was by no means a large move (gaining 0.2%).
Micron earnings after the close could portend some movement for tech and AI chip stocks. Tomorrow at least we’ll get initial jobless claims. Friday brings the PCE Deflator, but nobody really cares about inflation anymore.
So yeah, boring.
Stocks on the Contrarian Radar©️
Visa (V 0.00%↑) stock took a tumble yesterday, dropping 5% on news the company is being sued by the Justice Department over monopolistic practices. This has prompted the inevitable sleuthing about Nancy Pelosi trades on the social media. Apparently the California congressman sold $1 million-worth of Visa shares a month ago. Never mind that $1 million is not a lot of money for the likes of Pelosi, or that Visa’s stock has rallied over the last month — and is indeed still higher even after this news:
In the greater scheme of things yesterday’s sell-off is just a tiny pullback from all-time highs:
Visa is a terrific business and — full disclosure time — The Contrarian holds a bunch of it. But from a valuation standpoint it is not cheap, trading at 28x forward earnings, a whopping 15x forward sales, and 26x cash flows.
So as enticing as it is to buy Visa here — I mean what is the Justice Department going to do, really? — it is still expensive. So The Contrarian is going to sit this one out. Besides, he bought the dip after Visa missed earnings last month.
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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Micron Earnings, New Home Sales