Market Performance (Prior Week)
The Good News
Earnings continue to be impressive
— Stephanie Link (@Stephanie_Link) October 23, 2021
Earnings, in full swing: So far, the results have been good. The growth estimate for Q3 EPS has improved to 32% from 28% at the start of earnings season. pic.twitter.com/IRvRa1Z2Vx
— Jurrien Timmer (@TimmerFidelity) October 25, 2021
Big week for Q3 earnings with the #tech market cap heavyweights reporting.
Q3 results have been on 🔥
Beat rate 84%
Earnings growth 32.7%
Revenue growth 15.3%
— Matthew Miskin, CFA (@matthew_miskin) October 25, 2021
And margins seem to be holding in strong
Profit margins have gained increasing amount of attention this year given high input price pressures; but thus far, forward margin estimates have continued to rise in each quarter and are not yet rolling over to any significant degree pic.twitter.com/zkQDJ4uabv
— Liz Ann Sonders (@LizAnnSonders) October 25, 2021
After dismal September, companies with high/stable profit margins are outperforming those with low variable margins by most since April
[Past performance is no guarantee of future results] pic.twitter.com/DWZrWTgiWr
— Liz Ann Sonders (@LizAnnSonders) October 26, 2021
And leading indicators slowing but still strong
Leading indicators – LEADING Indicators – continue to show tremendous strength on a 6-month basis. Hard to see the economy faltering anytime soon with these healthy data pic.twitter.com/vhDw3VSrIz
— Richard Bernstein (@RBAdvisors) October 21, 2021
And more longer term, but capex is picking up steam
MORGAN STANLEY: The US is seeing “the strongest capex cycle since the 1940s, driven by business investment in equipment and intellectual property rights. In the US, capex should reach the pre-Covid trend as early as 4Q this year.” pic.twitter.com/g43Jmfbknw
— Carl Quintanilla (@carlquintanilla) October 22, 2021
The Bad News
Although still strong, earnings are lower
As everyone focuses on the hot YoY numbers (base effects) and all the 'beats' (the enduring game on Wall St), they're missing the QoQ sequential decay in Q3 EPS (-10%) and sales (-1%).
— David Rosenberg (@EconguyRosie) October 26, 2021
And, okay, I may have called my shot a little early last week
An *unprecedented* 100 cargo ships are waiting to enter the ports of Long Beach and LA as of Tuesday https://t.co/NB7sCiuR0Q
— Rachel Premack (@rrpre) October 20, 2021
— Joe Weisenthal (@TheStalwart) October 22, 2021
And inflation expectations continue to march higher
Big day for five-year breakevens — highest since 2005 — on the same day there's HUGE demand at the 5-year TIPS auction. https://t.co/i4WNQhOyIA via @beth_stanton @MarkTannenbaum1 pic.twitter.com/qGL7fqDToG
— Kriti Gupta (@KritiGuptaNews) October 21, 2021
The State Of The Market
Social media and ecommerce aren’t even deflationary right now? Yikes
'Ecommerce sites have become contributors to rising inflation, bucking a years-long trend and heralding the prospect of higher prices and fewer discounts on a wide range of products this holiday season.' https://t.co/Q4Yu22ofkr pic.twitter.com/SqOK69tnJr
— Jesse Felder (@jessefelder) October 21, 2021
So now the supply chain crisis is hurting digital media stocks.
What’s the point of advertising stuff if you can’t get your goods off the boat? https://t.co/RHfnj1Dq46
— Joe Weisenthal (@TheStalwart) October 21, 2021
With the economy booming and inflation surging, rate hike expectations are moving forward
3 Fed 🏛 hikes next year? 🤔 pic.twitter.com/Dng6m5j7eO
— Win Smart, CFA (@WinfieldSmart) October 22, 2021
Which isn’t necessarily bad for the market
— Mike Zaccardi, CFA, CMT (@MikeZaccardi) October 26, 2021
And China remains a problem for the global economy
Chinese companies have defaulted on a record of at least $8.7 billion of offshore bonds so far this year, with the real estate industry accounting for one-third of that amount. https://t.co/89ArdW3VI4 pic.twitter.com/K2RpOM6nQX
— Lisa Abramowicz (@lisaabramowicz1) October 26, 2021
Is China in Big Trouble? asks @paulkrugman. Quite possibly thanks to real estate investment that dwarfs U.S. real estate investment before the GFC. Chart from his piece is h/t Kenneth Rogoff and Yuanchen Yang https://t.co/9XUxVnymdD pic.twitter.com/LRt7fUqFBo
— John Authers (@johnauthers) October 25, 2021
The China Credit Impulse fell to a 10 year low this Sept. & leads global growth momentum by 6 months.
The % of OECD countries w/ rising lead indicators MoM is down to 57% from 95% in July.
China is a major driver of the global business cycle & currently leading the cycle lower. pic.twitter.com/e1prZ563ay
— Julien Bittel, CFA (@BittelJulien) October 25, 2021
B of A: “China GDP growth has increasingly mattered to S&P earnings, more so than US GDP .. About 30% of global GDP growth over the past two decades has come from China (vs. 21% from the US).” [Subramanian] pic.twitter.com/OGnIQh9aQw
— Carl Quintanilla (@carlquintanilla) October 18, 2021
— FactSet (@FactSet) October 26, 2021
And lastly, welcome to the big five, Tesla
Tesla’s market cap tops $1 trillion and is worth more than these automakers combined.. pic.twitter.com/r3jkbQi6WX
— George Maroudas (@ChicagoAdvisor) October 25, 2021
Elon Musk's wealth has soared past a quarter of a trillion dollars. He's absolutely leaving Bezos in the dust. https://t.co/Ohk1SEdtTO Great chart spotted by @DavidInglesTV $TSLA $AMZN pic.twitter.com/ZqojaBTgAs
— Joe Weisenthal (@TheStalwart) October 25, 2021
Today Elon Musk became the richest man in the world with his net worth reaching $255 billion
He is now worth more than every MLB, NBA, and NFL team…combined at $241 billion pic.twitter.com/MZXe64M0qk
— Liam Killingstad (@LiamKillingstad) October 25, 2021
I don't think people comprehend how much money $300 billion is.
— Jake (@EconomPic) October 26, 2021
Chart Of The Week
— James Seyffart (@JSeyff) October 20, 2021
🤯 Global equities logged >$1 trillion dollars worth of inflows during the last 51 weeks.
🔹 For context, the prior best rolling 51 week record was +$250 billion.
🔹 2021 is 4x larger than the next best yearly inflow.
(via GS) pic.twitter.com/Ylsw0NtVQy
— Michael Goodwell (@MichaelGoodwell) October 24, 2021
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