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Nvidia Earnings
0:00
-8:04

Nvidia Earnings

The chipmaker reports after the close. Stock futures are pointing to a lower open. Then there’s natural gas prices…
Transcript

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Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Wednesday, Feb. 21. The Bottom Line segment of today’s podcast starts at (3:56) for listeners who want to skip ahead.

State of Play

Stocks retreated yesterday but finished off the lows. After the close Palo Alto Networks (PANW 0.00%↑) had earnings that were pretty horrific, lowering guidance, and that stock is down 23% in the pre-market. As we look at our board of indicators at 0645, that is all weighing on tech a little bit:

  • Stock index futures are pointing to a lower open. The Nasdaq is down 0.5% with S&P 500 futures down 0.2%;

  • Commodities are mixed. WTI crude oil is down 0.6% to trade around $76.50/barrel but natural gas is up 9%. Not sure what that’s about. May be a dead cat bounce as nat gas dropped to a 30-year low yesterday. Copper is unchanged;

  • Cryptos are retreating a bit with Bitcoin down 2% to trade close to $51,000;

  • Bonds are unchanged. The 2-year yields 4.60% whilst the 10-year yield is 4.27%.

Today’s Known Events

Today is all about Nvidia (NVDA 0.00%↑) earnings, but those aren’t until after the close at 1600. We’ll first get Analog Devices (ADI 0.00%↑) and Wingstop (WING 0.00%↑) before the open at 0930.

Others reporting after the close include Rivian Automotive (RIVN 0.00%↑), Etsy (ETSY 0.00%↑), Synopsys (SNPS 0.00%↑), Marathon Oil (MRO 0.00%↑), and Trip.com (TCOM 0.00%↑), among others.

It isn’t all about earnings today however. We also get minutes from the Fed’s last meeting at 1400 this afternoon. This could shed some more light on where the FOMC views monetary policy, specifically the decision on when to cut interest rates. Worth pointing out that this is for an event that already took place and which can (and will) be overruled by future data.

The Bottom Line©️

It looks like we could be in a bit of a holding pattern until Nvidia reports. Not entirely sure what else can be said about NVDA that has not already been said. The stock has performed parabolically, up 5x since the start of 2023. Expectations are for massive growth across the board. It’s hard to see how the company can continue to meet these expectations, much less surpass them, but that’s what we’ve been saying for several quarters already.

Either way, you figure that most of the growth is already baked in here. You’re certainly not going to see another quintupling of the stock over the next 14 months (right?). If you were smart or lucky enough to catch the wave, hopefully you took some profits along the way. If you have FOMO and still want to hop on board, well, you do you. The Contrarian has been spectacularly wrong about AI going back to last May so he’s not going to make any other outlandish statements about this.

Go ahead and read that link if you want the entertainment. And by all means, take everything people say about AI (and indeed everything) with several grains of salt. The Contrarian will stick to his knitting with consumer staples and value names and is determined to cling to this perch no matter the FOMO that rages around him.

Housekeeping

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The daily podcast discusses the major market activity and economic data release schedule for the day ahead, with a contrarian bent. Also includes regular podcast episodes a day (or more) early and without ads or announcements.