Contrarian Investor Media

Good morning contrarians! Stocks are moving higher in the pre-market despite a couple of negative headlines around Russia bond defaults and a crypto hedge fund blowup…

These events may yet be able to unwind without any systemic risk (the crypto hedge fund is small and Russia’s bonds, well, apparently not a concern either). But if there are many more such events, somebody is going to be left holding the bag. This would typically be the type of thing investors can point to as the proverbial ‘canary in the coal mine.’

Except investors appear to have decided that it’s time for risk-on. That was the story of last week at least and so far in the early going today it appears to be the story now as well. Is it too early to be piling into risk assets? Or is this an opportune time to snap up bargains, as Howard Marks said?

You tell me!

Oh, full briefing here: https://contrarianpod.substack.com/p/russia-bond-default-crypto-fund-blow?r=ag2nj&s=w&utm_campaign=post&utm_medium=web

Good morning contrarians! Stocks are pointing to further gains this morning. We have new home sales out at 1000. That’s about it.

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New episode is live! @deerpointmacro joins the flagship podcast to discuss his view that the Federal Reserve will only hike interest rates once more before easing -- potentially as early as September.

Good morning CommonStock! Stocks and cryptos are pointing to a rebound in the pre-market, but copper and bond prices might be more telling…

Initial jobless claims are out at 0830. Economists expect 227,000 new claims, down a bit from the 229,000 seen last week. This is an important metric to watch as many are saying that employment needs to slow before there can be any progress on inflation. Inflation of course being the one thing that is going to keep the Fed’s foot on the gas pedal of rate hikes.

Jay Powell returns to Capitol Hill for his second day of testimony, this time in front of Congress. Not expecting much to come from this as he is just likely to repeat his comments from yesterday.

In practical terms, employment is still too strong for the economy to slow by any reasonable magnitude. But that can’t persist with the Fed raising rates to slow down economic activity. That, at least, is the simple calculation. There’s a lot of room for nuance and many ways we can presumably still avoid economic contraction. But none of that is going to be resolved this week.

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Good morning contrarians! Stocks are dropping in the pre-market and due to give back yesterday’s gains…

Federal Reserve chair Jerome Powell starts two days of testimony in Washington, D.C. today. Powell addresses the Joint Economic Committee and take questions from the politicos. Don’t expect anything in the way of nuanced or educated questions from these folks. They’ll all be trying to score political points for the cameras.

Still, some details may emerge regardless. Investors will be looking for any indication for when the Fed may stop its interest rate hikes and quantitative tightening. Specifically they’ll be looking for what Powell says the Fed will consider victory over inflationary pressures.

Ultimately it may not matter what Powell says. For one, it’s just Powell. For another, it’s just talk. He’s been known to throw markets a bone during times like these but remember what happened the last time he did that? To refresh your memory: he said rate hikes of more than 50 basis points were not being actively considered. Obviously that lack of active consideration didn’t last very long as the Fed raised by 75bps at their last meeting.

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Good morning contrarians! Stocks are pointing to a higher open after the long weekend. Dead cat bounce?

Existing home sales at 1000 is the main economic data release of the day. This data release is unlikely to move markets, but it points a pretty ominous picture of the U.S. real estate market, which drives a lot of U.S. consumer confidence — and therefore U.S. consumer behavior, which basically drives the world economy.

There is no immediate catalyst for the bounce in risk assets this morning. Remember these things are typical of bear markets and quickly give way to selling as the trading day wears on. Concerns about the economy are pretty rampant. Higher interest rates are the root cause of this. It’s difficult to see how any kind of sustained buying can develop while the Fed remains hellbent on raising rates to rein in inflation. So until inflation comes down, this is the reality of the situation.

At least these are my views this morning.

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