“Once you start down the dark path, forever will it dominate your destiny. Consume you, it will.”

– Yoda

 

Good Morning,

Hey – we made it!  We got through the perilous, dangerous, chilling, hazardous, risk-filled summer of 2021.  Now, we face the perilous, dangerous, chilling, hazardous, risk-filled last 4 months of 2021.  You get the drift.

Nothing changes on this pathway from the media’s perspective.  There will be no good news.  There will be no “let up” is “the dangers facing us.”  Good Lord, they are all starting to blend together.  Re-read the opening quote today – it will help.

A Few New Things

The new items all fall into pretty much one category:  “Hey, that’s better than we thought….”

Before we get to that, let’s see how well we did with our view of summer from May.  Recall, we suspected with so many worried about “the summer swoon” early this year going into the summer haze, that in reality, “we are more likely to see a lot of internal churn with any red ink for more than a day or two leading to a solid rise in fear levels….”

So – here we are – the whole summer passed and the broad market is less than 1.25% away from where it was at the close of May

 

Note the overall market (not Tech focused) moved from 16,643 to 16,836.  Imagine how many hours of tensions and concern were wasted?

Meanwhile

 

The earnings season is closing out the way it started – strong and steady:

Tech investment = margin expansion.  We have stated this for many quarters now – and we are just beginning to peel this onion.  Notice the current trajectory of margin increases based on investments to date.  Look for sizable increases in Capex and Tech spending as the wave of change washes over the landscape – repeatedly in the years ahead.

Hundreds of Billions

…a quarter.  That’s what we now see coming from the S&P 500 each quarter.  Recall that the Q2 numbers just being completed started at sub – $370B.  The projections below are clearly short in the projected columns to the right

 

We suspect the highlighted number for Q3 earnings of $429 (in billions) will be short by $30 – $50 Billion but we have a couple months to wait for that to unfold.

Lastly, shown below, recall that as all the bad news was being poured over the good news, the expected numbers for both Q3 and Q4 doubled as the Q2 season unfolded.  The pipeline is steady, slowly but surely the supply squeezes are burning off and we suspect the latest fear of inflation will steadily burn away as well over the next quarter or two

 

For Now?

I suspect some chop in September would do the market good.  You often see that we suggest praying for a correction.  It is, of course, not because we like to see red ink.  Instead, we have learned over the last 4 decades that a nervous market tends to rise over time.  Walls of Worry are repeatedly built and then torn down – a stair-step process up the mountain, so to speak.

Do not be surprised to see one of those unfold.  My concern?  Everyone I speak to expects a correction to unfold – which is precisely when they don’t unfold.  LOL, go figure.

Just recall, it is not abnormal to see a little stress in the markets during September as the stage is set for a positive 4th quarter while we peer into the crystal ball of 2022 and beyond.

Our job is to help you remain focused on the broader horizon ahead – which is set to produce the best years we have ever seen over the next two decades.

Patience and discipline friends.  Patience & Discipline.

 

Until we see you again, may your journey be grand

and your legacy significant.