Market Performance (Last Week)
The Good News
Household net worth has skyrocketed
Growth in household net worth in current expansion has been rapid at +19.6% annualized; in prior expansion, rate was much more tame at +6.5% annualized pic.twitter.com/8XmkUxjuMp
— Liz Ann Sonders (@LizAnnSonders) December 10, 2021
Strong growth expected to continue next year
— FactSet (@FactSet) December 10, 2021
And initial jobless claims are now very, very low
US Jobless Claims hit their lowest levels since 1969.
The US population in 1969 was 203 million. Today it's 333 million. If you adjust for this population increase, jobless claims have never been lower than they are today.
— Charlie Bilello (@charliebilello) December 9, 2021
The Mixed News
Inflation is high, but last Friday’s report was in line with expectations
Estimate was right on the money, market is so far happy with the lack of surprise. Nov CPI +6.8% y/y. All major components up, highest headline number since June 1982. pic.twitter.com/xPkFuAwY3O
— Liz Young (@LizYoungStrat) December 10, 2021
And here’s what’s leading the inflation charge
Inflation in November hit 6.8%. Here are the biggest annual increases:
Rental car 37%
Used car 31%
New cars 11%
— Heather Long (@byHeatherLong) December 10, 2021
And there’s good reason to believe rent is actually understated right now (thread)
Reported inflation is understated. Owners’ Equivalent Rent (OER) relies on owner surveys to estimate inflation in housing costs. This is an extremely imprecise metric. The single family rental market provides more accurate data. OER in today’s reported core CPI was 3.5% YoY.
— Bill Ackman (@BillAckman) December 10, 2021
The Bad News
Although increasing, wage growth is still shy of recent inflation numbers
Wages are increasing at a rapid pace in the U.S., but they're still not keeping pace with consumer price inflation. U.S. real average hourly earnings are still deeply negative. pic.twitter.com/IQ7QjzDGdJ
— Lisa Abramowicz (@lisaabramowicz1) December 10, 2021
But with the unexpected rise in job openings & record high profit margins, there’s still room for higher wage increases
— Kathy Jones (@KathyJones) December 8, 2021
And PPI came in much higher this morning
'Prices paid to U.S. producers posted a record annual increase of almost 10% in November, a surge that will sustain a pipeline of inflationary pressures well into 2022.' https://t.co/kgXEe3wWTs pic.twitter.com/2Wjl4O8pIs
— Jesse Felder (@jessefelder) December 14, 2021
The State Of The Market
Last week was very strong
this is the best week for the S&P 500 since February pic.twitter.com/klC36EPmA4
— Katie Greifeld 🎄 (@kgreifeld) December 10, 2021
But it’s been pretty concentrated
— 𝐁𝐫𝐚𝐧𝐝𝐨𝐧 𝐕𝐚𝐧 𝐙𝐞𝐞 (@BrandonVanZee) December 12, 2021
The Top 10 companies in the S&P500 are up 20% over the past six months. An index for the remaining 490 companies is up only 5%. This chart tells the story. pic.twitter.com/JlIQ2eXAwo
— Peter Mallouk (@PeterMallouk) December 10, 2021
1) Once and for all: here are the final numbers. I did them myself under the supervision of two math wizards.
The Nasdaq is up 21.17% YTD.
AAPL, MSFT, GOOGL, TSLA & NVDA are the top 5 return contributors YTD.
Excluding the top 5 contributors, the Nasdaq is up 5.79% this year. pic.twitter.com/QOGMOOSi1H
— Gavin Baker (@GavinSBaker) December 9, 2021
64% of 23% YTD gain in Nasdaq (3780 stocks) down to just 5 stocks:
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) December 10, 2021
And the weightings of the top 5 just keep going up
Concentration of the 5 largest stocks in the S&P 500 pic.twitter.com/agHkB8sp2t
— Scott Galloway (@profgalloway) December 10, 2021
And it seems like their weightings are decoupling from their earnings contribution
Top 10 SPX weights represent a growing share of the index while their earnings contribution drops. pic.twitter.com/Burr9zauJ4
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) December 12, 2021
So where could we be in the market cycle?
Will the current market cycle, which is about 20 months old, last 4 years too? Our work points to a leadership transition to phase 4 in 2022. #macro #marketcycle #growth $SPY pic.twitter.com/gW1Qi6pIh1
— Michael Kantrowitz, CFA (@MichaelKantro) December 12, 2021
And so now all eyes turn to the Fed
"Investors seem to think there is only one risk that matters: a policy error by central banks. Almost half of those surveyed say this is their major concern, close to the largest reading ever for a top concern:" BofA December credit investor survey
— Lisa Abramowicz (@lisaabramowicz1) December 13, 2021
Central banks on inflation in 2021. pic.twitter.com/foYE9l0wd2
— Gold Telegraph ⚡ (@GoldTelegraph_) December 10, 2021
Charts Of The Week
— Michael Mauboussin (@mjmauboussin) December 13, 2021
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) December 12, 2021
— Giles Wilkes (@Gilesyb) December 10, 2021
— PensionCraft (@PensionCraft) December 10, 2021
Corporate America better listen up.
88% prefer WFH. pic.twitter.com/1k43XknoeQ
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) December 8, 2021
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