Tesla Earnings

Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Wednesday, Oct. 23. The Bottom Line segment of today’s podcast starts at (4:17) followed by Stocks on the Contrarian Radar©️ for listeners who want to skip ahead.

State of Play

A couple of unexpected events after yesterday’s close: Starbucks (SBUX 0.00%↑) pre-announced poor earnings and McDonald’s (MCD 0.00%↑) was hit by an E. coli outbreak. Both stocks dropped overnight but maybe not by as much as they could (or should?) have. More on that later.

As we eye our board of indicators for signs of direction at 0655 there is little in the way of risk appetite:

• Stock index futures are moving a bit lower, led by small caps again. The Russell 2000 is down 0.5%. S&P 500 and Nasdaq down a little less;

• Commodities appear to have reversed course after the rally early in the week. WTI crude oil is down almost 2% to trade around $70.50/barrel. Copper is down 1%. Even silver is moving lower, down 1%. Gold is flat;

• Bonds are unchanged. The 2-year yields 4.05% whilst the 10-year yields 4.23%;

• Cryptos are dipping a bit. Bitcoin is down 1% to trade around $66,500.

Today’s Known Events

Earnings are once again the main focus of the day:

• Coca Cola (KO 0.00%↑) beat estimates but the stock is dropping in the pre-market, apparently due to volume sales;

• AT&T (T 0.00%↑) results were mixed but management appears to have maintained guidance and that stock is ticking higher;

• Hilton Worldwide (HLT 0.00%↑) missed estimates and is moving lower;

• General Dynamics (GD 0.00%↑) and Boeing (BA 0.00%↑) also report before the open at 0930.

After the close at 1600 we’ll hear from:

• Tesla (TSLA 0.00%↑). That’s the big one though there has been a clear divergence between Tesla and tech stocks;

• Lam Research (LRCX 0.00%↑). This could have an impact on AI chip names;

• IBM (IBM 0.00%↑).

Some economic data as well: Existing home sales are out at 1000. The expectation is for 3.9 million sales, roughly in line with last month’s figure. We spoke of home builders yesterday and how these stocks were taking on water. Well, they sank more yesterday. Nobody seems to know why exactly but this data release could have an impact…