Market Consolidation In The Second Week Of November
In his Daily Market Notes report to investors, while commenting on market consolidation, Louis Navellier wrote:
Get The Full Walter Schloss Series in PDF
Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues.
Q3 2021 hedge fund letters, conferences and more
‘Damsel in Distressed’ Dominique Mielle On Being A Woman In A Male-Dominated World
The world of hedge funds has long been dominated by men, and it doesn’t look like that will change anytime soon. However, some women have made an impact on the industry, and as time goes on, it’s possible that more women will join hedge funds. Dominique Mielle made her mark on the industry during her Read More
20% From Here
I think that at the end of January, we’re going to be 18% to 20% higher than we are today. That’s a bold statement. But we’ve got a lot of earnings coming out, seasonal strength and an accommodative Fed.
It looks like we’re going into this holiday shopping season very optimistically. Personal income has been up every month except September and September dropped because the extended unemployment benefits disappeared. But personal income is very high. And when you put money in people’s pockets, they spend it. If sections of the store are empty, they’ll find something else to buy.
So we have a lot of optimism as we go towards the end of the new year. And there’s also a lot of political optimism, too, because we have the Virginia election and other elections around the country, and there’s clearly a shift underway. And I know the House passed infrastructure bill, but that didn’t have a lot of the other things that they were going to attach that was offending some or worrying some voters.
It’s just time to be happy.
Consolidation In The Second Week Of November
I mentioned last week that we can get some consolidation in the second week of November, and I stand by that but melt-up is what’s going on under the surface. There’s clearly a lot of money pouring in the market still, and earnings season isn’t quite over yet. Still, I’m actually a little sick to my stomach because I know when we go up this much this quickly that it cannot last forever and there’s going to be a retreat.
I want investors to pinch themselves. It’s not always going to be this good, but I feel it is going to be very good going into January.
A lot of us that observe the markets are just in shock with what the Fed did last week. We were anticipating that they would curtail their quantitative easing by up to $30 billion a month. They only decided to do $15 billion a month. That was a huge surprise.
And then Powell refused to address raising interest rates. The Fed still seems to be obsessed with trying to create more jobs. There are 4 million jobs missing since the pandemic. But the labor force participation rate is down because some people chose to retire and many working moms decided to stay at home with their kids. So it’s very interesting, but it’s clear the Fed wants to replace these 4 million jobs because that’s their mandate.
But the economy became more productive as a result of the pandemic and technological change was accelerated. And that’s one of the reasons for the earnings explosion. We’re more productive. We’re not stuck on freeways, we’re not flying around as much as we used to.
So the fact that we have a dovish FOMC statement is one reason the market is so firm right now.
The other reason the markets are so firm is the ten-year treasury yields under one and a half percent. We’ve had a bulge in intermediate yields, but the ten-year yield all of a sudden didn’t about-face and started dropping again. And that’s just causing money to pour into the market. It’s as simple as that and no one anticipated it.
The other thing that’s going on is that we’re getting very strong economic forecasts for the fourth quarter. The Atlanta Fed, which can miss the broadside of the barn from time to time — they certainly missed it on the third-quarter GDP — but the Atlanta of Feds are at eight and a half percent GDP growth. I mean, that’s nuts and it means we’re about to hit the strongest pace of growth in over a year.
Heard & Notable
The vast majority of lost jobs are service-sector jobs, with the leisure and hospitality industry alone accounting for 1.38 million of the total 3.75 million lost service sector jobs. At the other end of the spectrum jobs lost in utilities, transportation, and warehousing and the financial sector have largely been recovered. Source: Statista
Updated on Nov 8, 2021, 4:28 pm