Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets in the day ahead. Today is Wednesday, Jan. 10, 2024. The Bottom Line segment of today’s podcast starts at (3:12) for listeners who want to skip ahead.
State of Play
Stocks didn’t move much yesterday, with the exception of small caps which dropped. Today is a quiet day with virtually nothing in terms of known events. As we look at our board of indicators at 0645, things are predictably quiet:
Stock index futures are flat as a board with no major index moving more than 0.1% from the break-even point;
Cryptos are selling off after that fracas over the SEC announcement yesterday. Bitcoin is down 2% and traders are apparently getting nervous according to industry reports. But then 2% really isn’t much of a move when it comes to Bitcoin and it sounds like the spot ETF is a fait accompli anyway;
Commodities aren’t doing much. WTI crude oil is unchanged trading around $72/barrel. This despite the largest attack to date by Houthi rebels in the Red Sea. Copper is up 0.7% though, promisingly;
Bonds are seeing a few bids, with the 2-year yield down 2 basis points to 4.35% and the 10-year down 2bps to an even 4.00% (yields move inversely to prices).
Known Events
It’s another slow day. China was supposed to report new loan data but that is still outstanding. Or maybe The Contrarian read the calendar wrong. No data releases to speak of other than the weekly ones (mortgage rates and crude oil inventories).
There’s a 10-year auction this afternoon at 1300. KBHome (KBH 0.00%↑) reports earnings after the close. That’s it. We’re done.
The Bottom Line©️
A slow day should provide a good test of our physics hypothesis to gauge the mood of investors. The hypothesis goes like this: a market at rest tends to stay at rest. A market in motion tends to stay in motion. Unless acted upon by an outside force. With few (basically no) outside forces expected, the underlying psychology will drive investor behavior.
It could of course be caution that drives things. That certainly seems to be the story of the year so far, with the riskiest part of the market (small caps) selling off but large caps (ex-Boeing) and specifically value names doing okay. Pay attention to any changes in that formula.
Finally, be sure to listen to the latest guest episode starring
that went live yesterday. It’s available to you (premium subscribers) only at this time:
Housekeeping
Obviously this is not investment advice (duh). Do your own research, make your own decisions.
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Quiet Hump Day: A Good Test of Underlying Sentiment