Focusing on Quality in a Mid-Cycle Market
U.S. equity markets continue to set new highs, powered by an increasingly narrow group of stocks. Setting aside the cognitive dissonance-inducing earnings impacts from the pandemic and subsequent recovery, stocks continue to look expensive vs. their long-term earnings power. With leading economic indicators such as the 10-year Treasury yield, the ISM-Manufacturing PMI index, and upwards earnings estimates revisions all peaking in April, advisors are asking:
Are we seeing a rotation from growth-oriented cyclical stocks to higher-quality defensive names? If so, how can we find value opportunities for our clients among expensive U.S. equities?
Eric Lynch, Managing Director of Scharf Investments, will share his thoughts on today’s markets and discuss why quality matters and where compelling valuation opportunities exist both in the U.S. and abroad.
Q3 2021 Market Perspectives: "A Global Shift"
After beginning the quarter on a relatively upbeat note, familiar themes returned as fears of inflation, ambiguity over the end of the pandemic, and uncertainty about the future of Chinese capitalism raised concerns for investors.
Fed To Taper, Inflation Rising, Retail Shortages Coming
We touch on several bases today as we often do. We begin with the Fed which decided to start reducing its monthly purchases of Treasury bonds and mortgage-backed securities in November. This was not a surprise.
A Long Term Look: Residential Building Permits and Housing Starts
Over the long haul the two series offer a compelling study of trends in residential real estate. Here is an overlay of the two series since the 1959 inception of the Starts data and the Permits data, which began being tracked a year later.
America's Driving Habits as of August 2021
"Travel on all roads and streets changed by +8.3% (+21.0 billion vehicle miles) for August 2021 as compared with August 2020. Travel for the month is estimated to be 273.8 billion vehicle miles." The 12-month moving average was up 0.7% month-over-month and up 4.2% year-over-year. If we factor in population growth, the 12-month MA of the civilian population-adjusted data (age 16-and-over) was up 0.64% month-over-month and up 3.7% year-over-year.
For The First Time Since the 70s, Demographics Support Higher Rates
New projections of the labor force growth rate by the US Bureau of Labor Statistics show the US labor force growth accelerating in the 2020s for the first time since the 1970s.
Weekly Gasoline Prices: WTIC Highest Since 2014
As of October 18, the price of Regular and Premium were up six and five cents each, respectively, from the previous week. According to GasBuddy.com, California has the highest average price for Regular at $4.49 and Texas has the cheapest at $2.95. The WTIC end-of-day spot price closed at 81.69, up 1.5% from last week and up 72% from the beginning of the year. Both gas prices and WTIC are at their highest levels since 2014.
New Residential Housing Starts Down 1.6% in September
The U.S. Census Bureau and the Department of Housing and Urban Development have now published their findings for September new residential housing starts. The latest reading of 1.555M was below the Investing.com forecast of 1.680M and a 1.6% decrease from the previous month's 1.580M.