Trade Wars, Earnings, PMIs

Good morning contrarians! Welcome to the Daily Contrarian, our morning look at events likely to move markets. It is Wednesday, March 5. Today’s Stock On The Contrarian Radar©️ APTV 0.00%↑ can be read at the bottom of this page.

Be sure to read this month’s Contrarian Portfolio update letter.

State of Play

Stocks dropped again yesterday but finished off the lows due to news of Trump tariffs apparently being scaled back already. The president also gave a long speech to Congress last night that was long on style but short on substance and importantly didn’t dial back any of the trade war rhetoric — and may have actually increased it.

As we eye our board of indicators for signs of direction at 0650, it does look like risk appetite is emerging:

• Stock index futures are pointing to a higher open, led by small caps. The Russell 2000 is up over 1%. Nasdaq futures +0.7% and S&P 500 +0.6%;

• In commodities land, a major rally in copper, up 4.5%. This is surely due to trade wars with China. WTI crude oil is down 1.5% to trade around $67/barrel;

• Cryptos are gaining as well, with Bitcoin up 7% to trade close to $90,000;

• Bonds are seeing a bit of selling with the 10-year yield up 3 basis points to 4.24% (yields move inversely to prices).

Today’s Known Events

We start once again with earnings:

• In Germany, Adidas and Bayer AG reported earnings that appear to have impressed investors as those stocks are moving higher in Frankfurt trading;

• Foot Locker (FL 0.00%↑) just reported mixed results but the stock is rising in the pre-market, to the tune of 3% at the time of this writing. This comes right after FL dropped to a 52-week low yesterday;

• Abercrombie & Fitch (ANF 0.00%↑) and Campbell Soup (CPB 0.00%↑) also report before the open at 0930;

• After the close at 1600 the big name is semiconductor manufacturer Marvell Technology Group (MRVL 0.00%↑)

Some economic data to tell you about as well:

• ADP Nonfarm Payrolls are out at 0815. This is separate and appears in no way related to Friday’s non-farm payrolls from the Bureau of Labor Statistics. As a result, it rarely (ever?) gets a reaction from markets. But it’s an important economic data point nonetheless. The expectation is for 144,000 new jobs in February, a bit below the $183,000 number the previous month.

• Non-manufacturing PMIs are out at 1000. The expectation here is for a reading of 53.0, a bit above the 52.8 recorded last month and still comfortably above the 50 level that separates expansion from contraction. This could move markets because the services sector is such a crucial source of high-paying jobs. As we’ve been saying for some time, if the job market takes a turn for the worse economic growth will soon follow.

• Factory orders are also out at 1000. Economists who were surveyed expect an increase of 1.5% month-over-month, an improvement over the -0.9% print recorded the previous month.

• The Fed’s beige book is out at 1400. This a report on economic conditions in each of the Fed’s 12 districts. It only happens eight times a year. Unfortunately there is no number attached to it but it’s worth paying attention to nonetheless and does sometimes move markets.

(Cover art by author via Flux Dev AI)