By Bill Hornbarger, Chief Investment Officer
Three Things to Watch
Earnings season begins in earnest this week. In the early releases, companies are topping estimates by approximately 16% versus the long-term average of 4%. S&P 500 companies are expected to post profit growth of 32% this quarter, per Seeking Alpha. Notable companies reporting this week include Netflix, Tesla, American Express, Intel, Procter & Gamble, and Honeywell.
Housing data will be in focus this week with the National Association of Home Builders survey released Monday, followed by housing starts (Tuesday) and existing home sales (Thursday). The leading index reading for September is released on Thursday and is expected to be up 0.4%, which would represent the 16th of the last 17 months of positive readings.
In addition to the Beige Book on Wednesday, there will be a slew of Fed speakers on the docket this week, with at least one each day and Fed Chairman Jerome Powell participating in a policy panel discussion Friday.
Three Things to Know
Governments, companies and households raised $24 trillion last year to offset the pandemic’s economic toll, bringing the global debt total to an all-time high of $281 trillion by the end of 2020, or more than 355% of global GDP, according to the Institute of International Finance. (Source: Bloomberg)
Households, mutual funds, pension funds and foreign investors hold $19 trillion of U.S. cash assets, accounting for 68% of total U.S. cash assets and reflecting a $4 trillion rise versus their pre-pandemic holdings. (Source: The Market Ear)
Since mid-September, volatility in stocks and bonds has diverged. Equity market volatility (as measured by the VIX index) has been declining while bond market volatility (as measured by the MOVE index) has been climbing. (Source: Bloomberg)
The above information reflects the current opinion of the author. It is based upon sources and data believed to be accurate and reliable. Opinions and forward-looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security mentioned.
By Ben Norris, Securities Research Analyst, Associate Vice President
Third-quarter earnings season kicked off last week accompanied by a slew of economic and market data releases. Third-quarter earnings is off to a strong start relative to consensus expectations and stocks gained accordingly last week with Thursday showing the strongest daily performance (+1.7%) for the S&P 500 (SPX) since March. Last week, the S&P 500 gained 1.8% while the NASDAQ Composite (COMP) and Dow Jones Industrial Average (DJIA) gained 2.2% and 1.6%, respectively. So far, earnings results are coming in +16% ahead of expectations, versus a +4% surprise on average. S&P 500 companies are expected to post profit growth of 32% versus last year’s third-quarter results. The coming few weeks will help investors form opinions on where we are in the ongoing recovery. Specifically, management teams will likely face questions concerning supply chain issues, labor constraints, and pricing pressure in general.