While expected, we think the Fed’s pivot to a more aggressive tapering schedule poses a larger risk for asset prices than most investors believe. Good news, supply is improving but will it arrive at the wrong time? Meanwhile, factors and styles remain volatile — stick with large cap defensive quality. Tapering is tightening for markets,…...
Key Metrics Earnings Growth: For Q4 2021, the estimated earnings growth rate for the S&P 500 is 21.2%. If 21.2% is the actual growth rate for the quarter, it will mark the fourth straight quarter of earnings growth above 20%. Earnings Revisions: On September 30, the estimated earnings growth rate for Q4 2021 was also…...
Look for further upside in 2022, the cycle is far from finished… the dip driven by new variant scare is unlikely to last… We believe there is further upside for stocks next year, despite a strong run so far, and do not see the recent new variant driven volatility as a game changer. Market could…...
A new COVID variant started the ruckus for markets, but we view that as secondary to the real culprit—the Fed’s more aggressive response to the “on Fire” data. Lower valuations is our call for 2022, and the Fed’s accelerated taper just brings it forward. Favor Large Cap Defensive Quality. We Didn’t Start the”Fire.” Over the…...
Research Report Excerpt #1 Nonetheless, some variables provide greater force and as such are characterized as force factors. I’m of the opinion, the force factor of the day is monetary policy, the Fed (FOMC). The tweet stream above from St. Louis Fed President James Bullard Friday identifies his commentary shortly after the release of the November Nonfarm Payroll report. James Bullard…
Who needs a reset? Is it the S&P 500 (SPX), the forward price/earnings (P/E) multiple, the Nasdaq (COMPQ), the Russell 2000 (RUT), maybe all of the above. Since Black Friday, the markets have come under “heavy fire”, with pessimism, fear and volatility like many investors haven’t seen in a while. It’s times like these that…...
Spend 2 seconds on FinTwit and you’ll see why equities fell 5% in Sept, rose 10% in Oct and then fell 4% again. Overreacting in both directions is what equities do. Set your sails on things like macro but trim based on psychology because that’s what drives ‘short term’ action. ~Urban Carmel If you desire…...
Macro Strategy—Businesses have responded to unprecedented U.S. consumer-demand strength and rising capacity utilization rates by bringing real equipment investment slightly above pre-pandemic levels as 2021 progressed, with strong investment plans for 2022, especially in automation and production re-shoring. Still, big upside risks to consumer demand, logistical backlogs and labor shortages suggest supply may continue to…...
This week, we provide feedback to our 2022 Outlook—spoiler alert—there wasn’t as much as usual. Meanwhile, consumers are opening up wallets for the holidays as our survey suggested a few weeks ago. The question for investors is how long will it last? We make the case for a fade in 1H22. Primary push back is…...
Research Report Excerpt #1 Given that in the lead up to “Volmageddon” in 2018 we got up to 9 days of VIX/SPX rising together, most investors who remember this automatically assign a like-outcome, even though there were a great many more issues that combined to produce Volmageddon. Additionally, while the recent positive relationship does raise cautionary flags,…
