Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Friday, Feb. 9, 2024. The Bottom Line segment of today’s podcast starts at (3:59) for listeners who want to skip ahead.
State of Play
Stocks advanced a tiny bit yesterday, with the S&P 500 (SPY 0.00%↑) flirting with — and briefly surpassing — the magical 5,000 level. Earnings after the close were mostly disappointing, but cybersecurity company Cloudflare (NET 0.00%↑) was an outlier, beating estimates and raising guidance and seeing a pop overnight. As we look at our board of indicators at 0640, some risk appetite appears to be emerging:
Stock index futures are moving a bit higher, led by small caps. The Russell 2000 is up 0.6%. Nasdaq futures are 0.3% to the good. S&P futures up a little less;
Commodities aren’t doing anything. WTI crude oil is unchanged at $76/barrel. Copper is down 0.3%. Cocoa prices keep rising, apparently to record highs;
Cryptos continue to gain with Bitcoin up another 5% to trade around $46,800;
Bonds are unchanged. The 2-year yields 4.47% whilst the 10-year yield is 4.17%.
Today’s Known Events
There are no economic data releases to speak of today, but there are earnings.
PepsiCo (PEP 0.00%↑) already reported. Results were mixed with EPS beating estimates but revenues falling short. The stock is moving lower in the pre-market.
Enbridge (ENB 0.00%↑), Canopy Growth Corp (CGC 0.00%↑), AMC Networks (AMCX 0.00%↑), and Newell Brands (NWL 0.00%↑) are some of the more interesting names to report before the open at 0930.
The Bottom Line©️
So a pretty blah Friday with little in the way of known events. This leaves us once again with an opportunity to test our ‘physics hypothesis.’ This follows the premise that an object in motion tends to stay in motion while an object at rest tends to stay at rest unless acted upon by an outside force. For markets, these outside forces are information (news, data releases, earnings, etc). With little in the way of known events to impact sentiment, investors are left to proceed with base emotions — fear and greed. If there’s fear, it leads to selling in risk assets. Greed = buying. One of these is usually boss, unless there’s some kind of impasse. Either that or investors are just bored and don’t want to be bothered, in which case the market moves very little.
Record highs and #SP5K aside, this has kind of been one of those weeks. But we are up every week this year, which sounds like a pretty clear case of a bull market. For now, that is. The other thing here is that markets are forward-looking. So what’s happening now is based on expectations of the future.
Speaking of the future, have a great weekend. Back on Monday morning.
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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PepsiCo Earnings, #SP5K