Three Things to Watch This Earnings Season

We ran out of superlatives to describe corporate America’s stunning performance during first-quarter earnings season. Despite lofty expections, results exceeded expectations by one of the biggest margins ever. So what will companies do for an encore? We expect more good news this quarter as more of the economy has opened up, while also acknowledging the second quarter will almost certainly end up being the peak in earnings growth for this cycle. Here, we highlight what to watch. Read more

Stocks Streak

The S&P 500 was recently higher seven consecutive days for the first time since last August. Even more impressive, it made new highs all seven of those days. You have to go back to June 1997 to find the last time we saw a streak like that! Incredibly, this has happened only eight other times since 1950 and stocks were higher a year later every single time. Read more

Tempering Tech

As investors we fight against behavioral biases in every investment decision we make. Our Director of Research Marc Zabicki talked recently about some of these biases in this video. We become attached to our ideas and when we think about selling, “FOMO” kicks in—the fear of missing out. Buying is the easy part. But selling is hard. Read more

Where to Invest with Higher Inflation

Inflation is all the rage after last week’s much hotter than expected inflation numbers. Our base case remains that this period of higher inflation will be transitory, as many of the forces that have kept a lid on inflation over the past decade plus are still in place. Things like technology innovation, globalization, the Amazon effect, increased productivity and efficiency, automation, and high debt (which puts downward pressure on inflation) are all still firmly in play and should help keep inflation in check later this year and beyond. Read more

End of Recession Call May Come Soon

Incredibly, the COVID recession may have ended a year ago, but we still don’t have a call from the National Bureau of Economic Research (NBER). That may change when the first estimate of Q1 2021 gross domestic product (GDP) growth is released. The Q1 numbers are likely to show nearly a full year of strong growth now behind us following the dramatic slowdown of the US economy in March and April 2020 due to efforts to contain the COVID-19 pandemic. Read more

Best Business Conditions of the 21st Century

The United States, and the rest of the world, are looking to emerge from the shadow of COVID-19, and business conditions may already have put the pandemic in the rear-view mirror—at least according to the monthly business surveys conducted by the Institute of Supply Management (ISM). The ISM Manufacturing PMI surged to 64.7 in March versus 60.8 a month prior (index levels above 50 indicate expansion) and above all but one of the Bloomberg consensus survey estimates. Read more

Retail Sales Rebound

Retail sales rebound in January. US retail sales rose 5.3% month over month in January according to the US Census Bureau, ahead of Bloomberg consensus forecasts of 1.1%. The surge in retail sales was the highest in seven months, a strong response following December’s 1% decline as fresh stimulus checks helped spur consumer demand following the headwinds caused by rising COVID-19 cases at the end of 2020. Further, strong January retail sales should remove much of the risk for the US economy to stall in the first quarter of 2021. Read more