History suggests it could be one heckuva earnings season
Oct 13, 2021Good morning!
Strong start to the day with JPMorgan and BlackRock earnings and, frankly, not a moment too soon!
Here’s my playbook.
1 – This company is beating inflation even if the Fed can’t
This is not difficult to understand. Rising prices kill economic expansion and raising rates is the most direct way to stop that. But at what cost - every economic expansion in the history of our country has been put to death by the Fed.
That’s why companies like JPMorgan (JPM) make tremendous sense at the moment – because rising rates mean fatter profit margins.
Watch my take this morning with Dagen McDowell sitting in for Maria Bartiromo on Fox Business Network.
2 – A nation of quitters
More than 4.3 million people quit their jobs in August according to the data. They were not fired, terminated, laid off … whatever euphemism you want to use. They quit voluntarily with 721k retail and 5634 healthcare workers walking right out the door.
Economists say this is a sign of a strong economy but that’s a load of it. They’re walking because it’s broken.
3 – Jack’s back … in Hong Kong
Apparently, Alibaba’s founder Jack Ma was seen in Hong Kong a few days ago. I don’t think that’s a coincidence given the ongoing Chinese crackdown. Alibaba’s listed there and it’s a gateway for his company’s offshore business operations. My guess is he’s finally been let out off the oubliette because he’s finally rolled in the face of Beijing’s crushing crackdown.
Nothing happens by chance in China.
Ma is a “kite dancing in a hurricane” to paraphrase Mr. White speaking about James Bond standing up to Spectre in the 2015 smash hit by the same name.
Investors beware; Beijing’s charm offensive is next.
4 – Here comes one heckuva earnings season
C-suite execs are increasingly talking about 2022 and that further highlights the forward-looking nature of things we’ve been talking about. Savvy investors should pay attention. You don’t invest in companies based on where they’ve been; you buy because of where they’re going.
The markets are moving lower into reporting and that sets up – you guessed it – a rise into next year. My year-end SP500 target is still 4675 and 15%-20%+ from here 12 months out.
It’s all about the margins from here forward. The best companies – those with visionary CEOs, margin protection power, and global demand – will power up. The rest … well, let’s just say you’d better think twice about owning ‘em.
Apple, Microsoft … you know the drill!
5 – Beam me up Scotty
William Shatner is going to be the oldest person in space today when he blasts off aboard a Blue Origin rocket. Thing is he’s not “old” at all in my mind. I wish him the very best and hope space is everything he’s dreamed of. Green women are optional of course.
Bottom Line
Many people long for the past but the real beauty is inherent in what’s to come, especially when it comes to the financial markets.
There are trillions of dollars on the move.
Are you?!?!
As always, let’s MAKE it a great day.
Keith
