New All-Time Highs and Fed Week

November 1, 2021

Overview

Equity markets were mostly higher last week led by the S&P500 rising 1.3% to a new all-time high and closing out October up almost 7% on the month.  Consumer discretionary and telco led, while banks lagged.  Much is being made about the big October month.  We once again point to the normal seasonality, and lack of it, during the first-year Presidential term this cycle, under QE (see 2h2009, 2h2013, 2h2017).

Earnings Continue

Earnings results also continued last week, with mostly positive overall results. With about half of the S&P 500 reporting, 82% have topped earnings expectations and 77% have beaten revenues. Technology, financials and health care remain strong spots on both metrics, even as a few names (see Apple and Amazon) grappled with supply-side constraints. Overall, bottom-up earnings growth is estimated at 39% y/y for 2021Q3, almost 10 ppts better than at the start of October.

Exiting the Deadzone

We have exited the “buyback deadzone” period.  Corporate balance sheets are loaded with cash and now in position to start doling cash back to shareholders. There is currently $3.1 trillion in cash and equivalents held by U.S. non-financial corporations, just down from the record ($3.3 trillion).  This is more than 13% of U.S. nominal GDP.  By 2021Q2, combined dividend and buyback payments totaled $322 billion among S&P 500 companies.

This Week in the Federal Reserve

Central banks will be in focus, with the Federal Reserve likely to announce the beginning of its taper in QE program this week, and the Bank of Canada fully turning off the tap this week. The Canada Bank is abruptly shifting to reinvestment and pulled forward the timing of possible rate hikes to the middle quarters of next year.

The Investment Team on YouTube

As we mentioned last week, we are now filming the weekly “Stock Talk” podcast and publishing on YouTube! The audio-only versions remain available as usual. We invite you to subscribe to the Oak Harvest YouTube channel to get those videos, as well as loads of videos related to timely subjects involving financial planning.

Last week’s Stock Talk video, “Inflation, Interest Rates and Yield Curves” can be found here:

https://www.youtube.com/watch?v=2lj80Gm53HI  

Oak Harvest YouTube Channel

https://www.youtube.com/channel/UCkLvOm9F5iC01-hHxRmUXpQ

Stock Talk Podcast (Weekly Market News and Opinion from Oak Harvest):

https://oakharvestfg.com/stock-talk-podcast/

The Investor Mindset Podcast (Introduction to Critical Concepts for Investors):

https://oakharvestfg.com/investor-mindset/

This content contains general information and express the views of Oak Harvest Investment Services. All data, articles, and information cited are believed to be reliable at the time of creation; however, Oak Harvest does not warrant any information contained herein to be correct, complete, accurate or timely.

Oak Harvest provides links to content produced by other websites that OHFG does not control, and Oak Harvest does not necessarily approve or endorse such content and does not guarantee its accuracy. Nothing in this content constitutes personalized investment advice. Any charts, indicators, or graphs included or referenced in this content have limitations, and no such material is able, in and of itself, to provide a buy or sell recommendation for any security. Strategies and ideas discussed may not be right for you, and views and opinions expressed may change without notice. Strategies and ideas discussed will not apply to all client accounts or portfolios.

Nothing in this content constitutes a recommendation, or an offer or solicitation to buy or sell securities. Oak Harvest makes no assurance as to the accuracy of any forecast or projection made. Not all past forecasts or projections have been accurate. No current or future forecasts and projections are guaranteed to be accurate.  And future forecasts may not be as accurate as any forecasts discussed. Indexes like the S&P 500 are not available for direct investment and your results will differ. Past performance is not indicative of future results. Investing involves the risk of loss.