Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Friday, May 3. The Bottom Line segment of today’s podcast starts at (2:00) 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.
State of Play
Stocks advanced yesterday and got more good news after the close with Apple (AAPL 0.00%↑) earnings. As we look at our board of indicators at 0630, it looks like risk-on is emerging ahead of non-farm payrolls at 0830:
Stock index futures are pointing to a higher open, led by tech. The Nasdaq is up 0.7% with S&P 500 futures up 0.4%;
Commodities aren’t doing much, though copper is up 1%. WTI crude oil is unchanged trading around $79/barrel;
Cryptos are gaining a bit of ground with Bitcoin up 2.5% to trade around $59,300;
Bonds are unchanged. The 2-year yields 4.89% whilst the 10-year is 4.57%. Those are unchanged this morning but significantly lower than they were yesterday, indicating a rally in bonds (yields move inversely to prices).
Today’s Known Events
Non-farm payrolls are the story of the day. Economists who were surveyed expect 243,000 jobs, down a bit from the 303,000 seen last month, to keep the unemployment rate at 3.8%.
There are some earnings first, with Hershey (HSY 0.00%↑) and FuboTv (FUBO 0.00%↑) due to report intermittently.
The Bottom Line©️
It’s the same old game with NFPs: if the number comes in too hot, investors could get nervous that the Fed will need to keep rates higher for longer. If it comes in soft, then that conceivably would allow the Fed some leeway to cut rates sooner rather than later.
That’s the theoretical setup at least. Things often go haywire. It may simply default to our physics hypothesis, which states that a market in motion tends to stay in motion motivated by fear or greed. Which one is in charge now? There seems to be a bit of a tug-of-war developing, with much volatility. That usually doesn’t portend well…
One Year Ago Today…
Cryptos were emerging as the leading indicator for risk appetite after a series of bank failures (Daily Contrarian, May 2, 2023).
…and What Happened:
Cryptos, specifically Bitcoin continue to be a solid leading indicator for stocks. BTC has been quite the investment over the last year BTW. The digital currency has more than doubled in US dollar terms. The S&P 500 has done all right itself, putting in a gain of ~24%:
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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