No ‘Bazooka’ From China, Pepsi Earnings, US Trade Balance

Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Tuesday, Oct. 8. The Bottom Line segment of today’s podcast starts at (3:15) and Stocks on the Contrarian Radar©️ feat casino stocks WYNN 0.00%↑, LVS 0.00%↑ and MGM 0.00%↑ at (5:05) for listeners who want to skip ahead.

State of Play

Stocks dropped yesterday with tech seeing the worst of it. The Nasdaq was down 1%. Bad news from the Asia overnight, as China announced a new bond but refrained from implementing new stimulus. Shares in Hong Kong are down almost 10% as a result.

Here in the US, as we eye our board of indicators for signs of direction at 0615, things are mixed:

• Stock index futures are pointing to a higher open, but not by much. The Nasdaq and S&P 500 are up 0.4% each;

• Commodities are dropping on this China news. Copper is down 2.5%. WTI crude oil is down 2% to trade around $75.50/barrel;

• Bonds are moving higher for a change. The 2-year yield is down 4 basis points to 3.97% whilst the 10-year is down 1bps to 4.02% (yields move inversely to prices);

• Cryptos are moving a bit lower. Bitcoin is down 1% to trade around $62,300.

Today’s Known Events

Another slow day awaits. We did just get Pepsi (PEP 0.00%↑) earnings. These were mixed and management appears to have kept guidance unchanged. The stock is down just a bit (0.6%) at the time of this writing.

Other than that, US trade balance is out at 0830. The number that is anticipated by a survey of economists is -$70.6 billion, so a trade balance of almost $71 billion. That’s down a bit from the $78.8 billion recorded last month. Generally US trade balances are a good thing for the global economy because they mean the crucial US consumer is spending money to necessitate all those imports.