Market Performance For The Prior Week
The Good News
Shipping costs are getting better
— Lisa Abramowicz (@lisaabramowicz1) October 7, 2021
And people are still financially healthy enough to quit
record high quit rate pic.twitter.com/WnzBqFaOvx
— Sam Ro 📈 (@SamRo) October 12, 2021
And maybe openings are beginning to decline?
The number of U.S. job openings declined in September for the first time since last year, and by the most since April 2020. pic.twitter.com/1tXQ2c5KIw
— Lisa Abramowicz (@lisaabramowicz1) October 12, 2021
The Bad News
The jobs report was far below expectations
Big downside surprise. 194,000 jobs created vs the expectation of 500,000. Wages rose more than expected. Raises questions about whether the labor market is tighter than some people previously thought.
— Lisa Abramowicz (@lisaabramowicz1) October 8, 2021
And the participation rate has yet to pick up
While wage increases seem to be sticky
— Jesse Felder (@jessefelder) October 11, 2021
Putting the Fed in a tough spot. And there’s officially a new worry out there.
The State Of The Market
Inflation and the expectation of Fed tapering soon has lifted yields
Which has impacted the S&P during the shorter term. But it’s not a perfect relationship.
A simple look at quarters so far this year:
Q1: 10y up, S&P 500 up
Q2: 10y down, S&P 500 up
Q3: 10y up (barely), S&P 500 up (barely)
[Past performance is no guarantee of future results] pic.twitter.com/JMWfM9fbNv
— Liz Ann Sonders (@LizAnnSonders) October 5, 2021
Financials, Energy, and Commodities have been the winners from this rate increase
Not a perfect relationship, but since 10y yield made near-term low in early August, Financials sector has been gaining relative to Tech
[Past performance is no guarantee of future results] pic.twitter.com/N71Ga4rBeH
— Liz Ann Sonders (@LizAnnSonders) October 7, 2021
— Christophe Barraud🛢 (@C_Barraud) October 5, 2021
— Bespoke (@bespokeinvest) October 5, 2021
But all eyes are on earnings as we enter earnings season. Companies are expecting slower growth.
But also pay attention to margins. Can companies successfully pass on price increases? They have so far.
Key focus during 3Q21 earnings season should perhaps be be less on “beat rate,” and more on whether still-lofty (albeit down from 2Q21) expectations for net profit margins will be met@FactSet pic.twitter.com/Is3HLgUxce
— Liz Ann Sonders (@LizAnnSonders) October 11, 2021
'Margins are really, really high. It appears that the wildly supportive monetary and fiscal policy of the last year and a half has translated, more or less directly, into high corporate profitability.' https://t.co/1oY6tFubQ0 pic.twitter.com/NIoW8TZuz2
— Jesse Felder (@jessefelder) October 5, 2021
Which is all resulting in lower expectations for 2022
Charts Of The Week
Oh boy. Britain has an energy crisis. This is the price of UK Natural Gas futures, going back to 2000: pic.twitter.com/HjvuvMWAPj
— John Authers (@johnauthers) October 5, 2021
US used vehicle inflation continues to trend higher according to Manheim’s latest data. While a small category in CPI, used cars continue to a push headline/core inflation higher.
— DataTrek Research (@DataTrekMB) October 8, 2021
The U.S. stock market is larger than the next 11 combined. Kinda insane. pic.twitter.com/fDqU1KwzLd
— David Ingles (@DavidInglesTV) October 7, 2021
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