Good morning contrarians! If ever there was a time to reference the lyrics from that Kansas song, this would be it. Yesterday we were indeed tossed about like a ship on the ocean. Stocks started the day strongly before reversing late in the session to finish in the red again. The Nasdaq was up over 2% at one point only to end down 1.3%. S&P 500 gave up 1.1% on the day, with Dow Industrials dropping 0.9%. Small caps actually saw the worst of it, with the Russell 2000 falling 1.8%.

This morning stock futures are down again, while bonds are seeing some bids. Cryptos are falling apart, with bitcoin down almost 8%.

If investors do start bidding up bonds again as they sell growth (and cryptos), it would indeed be consistent with what you see at the start of bear markets. The only problem with this equation is that the economy is nowhere near a recession, and it’s hard to see how you can get a bear market without a recession. (Has that ever even happened before? Anybody know?)

The point is that investors appear to be acting like a recession is close at hand. Either they’re wrong and (most) risk assets recover, or they’re right and the party is over. I have my views on this, but you have to listen to the podcast to hear them.

Full briefing and podcast available to premium subscribers here:
[https://contrarianpod.substack.com/p/a-stormy-sea-of-moving-emotion-daily?r=ag2nj&utm_campaign=post&utm_medium=web](https://contrarianpod.substack.com/p/a-stormy-sea-of-moving-emotion-daily?r=ag2nj&utm_campaign=post&utm_medium=web)

Listen now (8 min) | After yesterday’s massive reversal there is little on the calendar today, which normally would lead to a quiet Friday. But these are not normal times…

https://contrarianpod.substack.com/p/a-stormy-sea-of-moving-emotion-daily?r=ag2nj&utm_campaign=post&utm_medium=web

A Stormy Sea of Moving Emotion: Daily Contrarian, Jan. 21

This member is verified by the Commonstock team based on their contributions to the Commonstock community. 

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Contrarian Investor Media

Apple Inc

Cheesecake Factory Inc.

Etsy Inc

Five9 Inc

Ii-Vi Inc.

Synchrony Financial

Candidates for buying opportunities for today, but only with proper signals for it:
$IIVI 64
$AAPL 165.80
$ETSY 158
$CAKE 36.20
$FIVN 126
$SYF 45

Daily interesting stocks

Vladimir

BioNTech SE - ADR

Moderna Inc

Nike, Inc. - Class B

Pfizer Inc.

Peloton Interactive Inc - Class A

Ralph Lauren Corp - Class A

Remember back in 2020-2021 when [$PTON](https://twitter.com/search?q=%24PTON&src=cashtag_click) was struggling to produce enough bikes and treadmills?

When they had to acquire a fitness equipment manufacturer for $420 million just to have more infrastructure to meet the unprecedented demand. Source: [https://www.cnbc.com/2020/12/21/peloton-to-acquire-fitness-equipment-maker-precor-for-420-million.html](https://www.cnbc.com/2020/12/21/peloton-to-acquire-fitness-equipment-maker-precor-for-420-million.html)

When they spent another $400 million to produce their first manufacturing facility in the US, in the state of Ohio, as a way to skirt past the supply chain woes. Source: [https://www.cnbc.com/2021/05/24/peloton-to-invest-400-million-on-first-us-production-facility-in-ohio.html](https://www.cnbc.com/2021/05/24/peloton-to-invest-400-million-on-first-us-production-facility-in-ohio.html)

Now, they're dealing with the opposite situation. A situation where demand has fallen off a cliff. A situation so severe that they now have to halt production. Source: [https://www.cnbc.com/2022/01/20/peloton-to-pause-production-of-its-bikes-treadmills-as-demand-wanes.html](https://www.cnbc.com/2022/01/20/peloton-to-pause-production-of-its-bikes-treadmills-as-demand-wanes.html)

While Peloton is the COVID stock spending its time in the limelight as investors are shocked at how a fast-growing company could suddenly be sitting on a ton of products that people wanted yesterday.

This situation that Peloton is facing could also be something many more firms will face in the future. Inflation is through the roof. Supply chain issues are reducing consumer sentiment. Everything that we're seeing from empty shelves to a parade of cargo ships off the coast of SoCal is making people rethink their consumption habits.

Many say that we're in a shortage of various goods like semiconductors and vehicles. However, when looking at the data, this "shortage" is the cause of an unprecedented demand surge.

The chart below shows the huge supply-demand gap for consumer goods. Global Real Production of Goods has been increasing. Comparing that to the nominal demand of goods, production is dwarfed compared to demand.

![](https://cdn.commonstock.com/6507368e9279f2f171bf0fe93053d0f4a5c45e54cd11c1b17f368481072fc3d5-545x497.png)

As seen below, the output is well above pre-COVID levels. Producers are producing way more than ever!

![](https://cdn.commonstock.com/c13ce3fffec00a29af2f67bc776f0c9394d6a503dd638a81cac7ed614161d0a0-640x346.png)

And imports are well above pre-COVID levels too! Despite the congestion at the ports, we manage to continue to import more product than ever.

![](https://cdn.commonstock.com/f0a090ea33fabbf002259dfa3adc2eb5e442038985352783af73d2068e449937-640x345.png)

As for the semiconductor industry, chipmakers are making more chips than ever. Every year, since 2019, chipmakers continue to expand their production of chips.

![](https://cdn.commonstock.com/d66907749fc47f134a9d1750ec4a64f36665dce43e3f6c244e588217b5c24ba7-640x289.png)

While the production of chips has been increasing consistently from 2019 to 2020, the unprecedented demand for chips in 2020 promoted chipmakers to expand production aggressively. That's why we see an acceleration in chipmaking in 2021.

While we might be seeing retail sales data (like the one below) today, in the future, that number could drop as consumers start to cut back on consumption and wait until these issues with "shortages" and supply chain issues get sorted out.

![](https://cdn.commonstock.com/9f84f269126b7a4f3e2a8fb6d9ad3a249d9db18607f2f384c43b0918813e8e2e-640x362.png)

And don't forget that it's not only Peloton that's seeing demand for goods slowing. $AAPL told its suppliers in late December that it's seeing demand for their new iPhones slowing as well. Source: [https://www.bloomberg.com/news/articles/2021-12-02/apple-tells-suppliers-iphone-demand-has-slowed-as-holidays-near](https://www.bloomberg.com/news/articles/2021-12-02/apple-tells-suppliers-iphone-demand-has-slowed-as-holidays-near)

As for the vaccine makers like $MRNA $BNTX and $PFE, they too are seeing demand for their vaccines slowing as well. The mad rush for boosters was quite temporary and many of the vaccinated are resisting the urge to get the booster because they don't see a point in getting it when bureaucrats and pharmaceutical companies are looking to add a 4th dose.

Google's Chromebooks are seeing lower demand: [https://www.bloomberg.com/news/articles/2021-11-04/intel-loses-ground-to-amd-as-demand-for-chromebook-chips-wanes](https://www.bloomberg.com/news/articles/2021-11-04/intel-loses-ground-to-amd-as-demand-for-chromebook-chips-wanes)

These few instances are just the beginning. We will soon see slowing sales for physical goods as time goes on. And with that possibility, we can see firms resorting to the sale of digital goods. $NKE and $RL are some of the retailers that look to benefit massively from resorting to the sale of NFT virtual clothing if ever demand for their physical clothes falls off a cliff.

_If there's one lesson I've learned from my high school economics class, it's that the peak of the Roaring '20s was evident when consumers started consuming less._

13h ago @Gautam__Baid tweeted: ""A pin lies in wait for every bubble. An.." - read what others are saying and join the conversation.

https://twitter.com/search?q=%24PTON&src=cashtag_click

$PTON - Twitter Search

Intel Corp. ceded more than 2 percentage points of market share to Advanced Micro Devices Inc. in the third quarter, marking another setback for a chip pioneer that has lost some of its technology edge.

https://www.bloomberg.com/news/articles/2021-11-04/intel-loses-ground-to-amd-as-demand-for-chromebook-chips-wanes

Intel Loses Ground to AMD as Demand for Chromebook Chips Wanes

Apple Inc., suffering from a global supply crunch, is now confronting a different problem: slowing demand.

https://www.bloomberg.com/news/articles/2021-12-02/apple-tells-suppliers-iphone-demand-has-slowed-as-holidays-near

Apple Tells Suppliers iPhone Demand Has Slowed as Holidays Near

Peloton plans to acquire the exercise equipment manufacturer Precor for $420 million, in a bid to speed up its production and meet promised delivery windows. 

https://www.cnbc.com/2020/12/21/peloton-to-acquire-fitness-equipment-maker-precor-for-420-million.html

Peloton shares soar after company announces $420 million deal for fitness equipment maker Precor

Peloton announced it will invest $400 million to build its first factory in the United States, in Troy Township in Wood County, Ohio. 

https://www.cnbc.com/2021/05/24/peloton-to-invest-400-million-on-first-us-production-facility-in-ohio.html

Peloton to invest $400 million to build its first U.S. manufacturing facility in Ohio

Peloton is temporarily halting production of its connected fitness products, according to internal documents obtained by CNBC. 

https://www.cnbc.com/2022/01/20/peloton-to-pause-production-of-its-bikes-treadmills-as-demand-wanes.html

Peloton to halt production of its Bikes, treadmills as demand wanes

Peloton's woes could be a preview of what's about to come

Dissecting the Markets

Good morning contrarians! Yesterday saw another day of selling, with the Nasdaq now officially entering correction territory (defined as a 10% decline from the all-time high). It’s the same story: fear of higher interest rates have investors selling their tech stocks and bond holdings alike.

If there has been a ‘rotation’ into anything it’s been cash and that type of situation simply cannot persist for very long. Not with the risk-free rate for cash still so low and with inflation still so high.
![](https://cdn.commonstock.com/c2f6aa73bcbda1b0042fd37f2ca1a89c4f2f18196b6be7b43a4e9124fa312331-2048x1536.jpg)

Today’s briefing and podcast is free for all so be sure to check it out and tell your friends!

[https://contrarianpod.substack.com/p/the-tech-correcteth-daily-contrarian?r=ag2nj&utm_campaign=post&utm_medium=web](https://contrarianpod.substack.com/p/the-tech-correcteth-daily-contrarian?r=ag2nj&utm_campaign=post&utm_medium=web)

Listen now (9 min) | Nasdaq officially enters correction territory. Netflix earnings up today, which may bring a reprieve. Or not…

https://contrarianpod.substack.com/p/the-tech-correcteth-daily-contrarian?r=ag2nj&utm_campaign=post&utm_medium=web

The Tech Correcteth: Daily Contrarian, Jan. 20

Good morning contrarians! Earnings season is now underway in earnest. Yesterday it was Goldman Sachs’ (GS) turn to disappoint investors as the stock sold off almost 7%. Today we are due to hear from financial majors Bank of America (BAC) and Morgan Stanley (MS), consumer staples giant Procter & Gamble (PG), health insurer UnitedHealth (UNH), United Airlines (UAL), aluminium producer Alcoa (AA), and pipeline company Kinder Morgan (KMI). Only one of these is a portfolio company. You’ll have to listen to the podcast to find out which.

There’s a lot at stake here and whatever forward-looking information these companies provide is sure to be parsed over meticulously by investors. For what it’s worth, 33 of S&P 500 companies have reported earnings and 70% have topped Wall Street estimates. [FactSet expects](https://insight.factset.com/sp-500-likely-to-report-earnings-growth-of-more-than-25-for-the-fourth-straight-quarter) S&P companies to grow earnings by 25% or more for the fourth straight quarter. That would be an impressive feat, but one cannot help but wonder if expectations are maybe a bit too bullish? Then again, that’s what was said the last couple of quarters.

More on today’s markets and what is moving them in today’s briefing and podcast, now available for premium subscribers:
[https://contrarianpod.substack.com/p/a-big-day-for-earnings-daily-contrarian?r=ag2nj&utm_campaign=post&utm_medium=web](https://contrarianpod.substack.com/p/a-big-day-for-earnings-daily-contrarian?r=ag2nj&utm_campaign=post&utm_medium=web)

Listen now (8 min) | Among those reporting quarterly numbers today are Bank of America, Morgan Stanley, Procter & Gamble, UnitedHealth, and that’s all before the market open…

https://contrarianpod.substack.com/p/a-big-day-for-earnings-daily-contrarian?r=ag2nj&utm_campaign=post&utm_medium=web

A Big Day for Earnings: Daily Contrarian, Jan. 19

Based on the five-year average improvement in earnings growth during earnings season, it is likely the S&P 500 will report earnings growth of nearly 30% for Q4.

https://insight.factset.com/sp-500-likely-to-report-earnings-growth-of-more-than-25-for-the-fourth-straight-quarter

S&P 500 Likely to Report Earnings Growth of More Than 25% for the Fourth Straight Quarter

Listen now (5 min) | It’s the winter solstice, literally the darkest day of the year in the northern hemisphere. Maybe an apt metaphor, but maybe not…

https://contrarianpod.substack.com/p/darkness-before-dawn-daily-contrarian?r=ag2nj&utm_campaign=post&utm_medium=web

Darkness Before Dawn? Daily Contrarian, Dec. 21

Good morning contrarians! It’s the winter solstice in the northern hemisphere, quite literally the darkest day of the year. Maybe an apt metaphor for markets, but maybe not…

Where things stand right now is detailed in today’s briefing and podcast, available to premium subscribers here:
https://contrarianpod.substack.com/p/darkness-before-dawn-daily-contrarian?r=ag2nj&utm_campaign=post&utm_medium=web

Listen now (6 min) | The Federal Reserve begins its two-day policy meeting today…

https://contrarianpod.substack.com/p/producer-prices-daily-contrarian-c4f?r=ag2nj&utm_campaign=post&utm_medium=web

Producer Prices: Daily Contrarian, Dec. 14

Good morning contrarians! Today is all about the producer price index reading ahead of tomorrow’s Fed decision.

PPIs are an important metric for inflation. Probably more important (certainly more forward-looking) than the CPI everybody was yelling about last week. Reason being that this is inflation at the producer level. This is where companies first experience it, before they pass it on to consumers.

More here:
https://contrarianpod.substack.com/p/producer-prices-daily-contrarian-c4f?r=ag2nj&utm_campaign=post&utm_medium=web

Listen now (8 min) | The Consumer Price Index release is being closely watched, but is overrated in terms of actual impact…

https://contrarianpod.substack.com/p/all-eyes-on-the-cpi-daily-contrarian?r=ag2nj&utm_campaign=post&utm_medium=web

All Eyes on the CPI: Daily Contrarian, Dec. 10

Good morning contrarians! Today is all about the CPI reading, due at 0830. Expectations are for a MoM increase of 0.5% in core prices. The YoY figure is expected to print at 4.9%, slightly ahead of October’s 4.6% reading.

The one that will be making headlines is the YoY figure including food and energy, which is expected to come in at 6.8%, the highest level since 1982.

This report is overrated for reasons that are discussed in today’s briefing and podcast, now live:
https://contrarianpod.substack.com/p/all-eyes-on-the-cpi-daily-contrarian?r=ag2nj&utm_campaign=post&utm_medium=web