Perspectives

We recognize that we may occasionally add to the cacophony of market commentary from time-to-time. Here, in one place, we wanted to present what we believe are the most important facts and our current opinions. FACTS Consumer net worth was, remarkably, up 10% in 2020 and is now at an all-time high at $130 trillion Personal savings is roughly $1.3 trillion greater today than it was one year ago The $1.9 trillion fiscal stimulus package is about 9% of nominal GDP; more than $1 trillion will be… View More

Tomorrow marks the 1-year anniversary of the 3/23/20 market low. Roughly +75% later, the only historical comps even in the ballpark are the first 12 months off the 1982 low (+58%) and the first 12 months off the 2009 low (+69%). One of our themes over the last year has been, unique crisis / ordinary market, and in that spirit, we want to reemphasize how different year 2 off the low looks typically looks compared to year 1… performance tends to be more in line with historical averages and it’… View More

We hope you all had a great weekend. We wanted to share with you an email that a good client of ours sent this weekend. He wrote that we probably know all of this, but he found it fascinating and an easy read. He wrote that he finally understands where we are at and why the markets keep going higher. The article he sent was entitled “Americans have never been RICHER” and the introduction went like this. Contrary to what the media will have you believe, the U.S. Consumer is actually in exce… View More

Spring is in the air and with it comes hope in the fight against Covid-19. We have attached a data sheet to this email that shows the progress that has been made in the US on Covid-19. The infection rate, hospitalization rate, and most importantly, the death rate are all falling rapidly. In the US, there have already been more than 95 million doses of Covid-19 vaccines administered, and the CDC estimates that we already have over 60% of the US population immune to Covid-19. With improving Covi… View More

On Saturday the US Senate passed President Biden’s American Rescue Plan, a $1.9 trillion spending package designed to deal with the economic and health effects of COVID-19. Although there are still a few steps left in the process, President Biden is well on his way to signing into law a very large fiscal package within the next week. Some minor changes were made to the legislation during the Senate’s 24-hour amendment process last night but we believe the legislation will come in just slight… View More

4Q Earnings Season Wrapping Up The fourth-quarter earnings season is just about completed now, and pretty much all things considered, it was a strong showing across the board. Every sector saw greater than expected earnings growth except energy which was still dealing with extremely low oil prices. That will change in 2021. Sales growth also showed significant improvement with only the utilities and the energy sector finishing the quarter below initial expectations. Earnings Growth To Take The… View More

Ever since the stock market bottomed in 2009 during the financial crisis, people have been coming up with reasons why the bull market was about to end. We heard every reason – Brexit, the end of Quantitative Easing, too much debt, COVID, etc. – and while we understood each may be a cause for consternation, we focused on valuations, which suggested the bull market would continue. Over time, math wins. After the recovery in stocks from the 2020 lockdowns (and especially the latest surge in eq… View More

Fourth quarter 2020 earnings and revenue growth both surprised with positive results. With more than 75% of companies reporting, earnings growth is expected to be 3.4%. This is a significant increase compared to the -1.03% originally estimated on January 1st and further improvement from last week’s 2.4%. Revenue growth is also expected to be positive at 1.3%, up from -1.4% at the start of the year. In aggregate, companies are reporting earnings that are more than 17% above estimates, outpacin… View More

While higher commodity costs could challenge the industrials sector, it could also significantly boost earnings per share (EPS) for the energy sector. From 1995 to 2015, energy contributed approximately 12% to the overall index EPS while over the last 12 months, it has detracted about -7%. A return to profitably for the energy sector may be the key for index EPS to surprise to the upside in 2021 and 2022. By the end of 2021, current estimates are only suggesting a 2% contribution to overall earn… View More

With just less than 40% of S&P 500 companies reporting for the 4Q earnings season, results continue to come in quite strong. Estimated sales growth flipped positive for the overall index, and earnings growth is now estimated to be down only -1.6% led by the Technology and Financial sectors. The energy and industrial sectors continue to be the biggest laggards. Greater than 80% of companies are beating estimates for the 3rd quarter in a row, more than 80% of companies reporting have beaten ea… View More