“Obstacles don’t have to stop you. If you run into a wall, don’t turn around and give up. Figure out how to climb it, go through it, or work around it.” –Michael Jordan

Good Morning,

Some lyrics first:

“We can be heroes everywhere we go
We can have all that we ever want
Swinging like Ali, knocking out bodies
Standing on top like a champion
Keep your silver, give me that gold
You’ll remember when I say
We can be heroes everywhere we go
Keeping us down is impossible
‘Cause we’re unstoppable”

– “Unstoppable” by The Score

Speaking of Michael Jordan, I was always a big fan of his Nike commercials. Too often, people tend to see only the end results – overlooking the required, sometimes painful steps demanded to get there.

Don’t fret – there is a point here – but first, one of the better lessons learned from Jordan’s commercials:

So I Promised a Point

…and here it is…

America – and all of us blessed and fortunate enough to live here –is unstoppable.

Here we are – together – going through an incredibly difficult time. The massive negativity of the media coverage many are consuming has mistakenly led many to believe somehow we are defeated.

Nah – not even close – and being concerned about that sets the stage for a major mistake when we all look back on this time together years from now.

How do we know? Simple.

People.

You can’t beat us together.

In the early 80’s, the Boomers came into a very difficult jobs market. Unemployment at 10%++. The response? An explosion in small business formations.

Snapshot forward to today. Terrible right?

Nope–it is happening again.

Same song – second verse:

It’s kinda funny really. In the midst of all the mayhem, it is the seemingly little piece of data – often completely missed or overlooked – that becomes the major domino of the times.

Check the three snapshots above. You know what happens after you kick America in the gut? You know what happens right after you knock her back a few rows?

√ You awaken a sleeping giant.

Now – check the data above again: note the massive response to the setbacks.

Over 1.5 million++ business applications in the last 90 days alone.

A full one million more than the number bantered about of the businesses closing due to the COVID shutdown response.

What do think has a more positive impact on our future?

Focusing on the 500,000 closed businesses, or instead, staring into the teeth of the 1.5MM++ new businesses just starting out fresh?

Ignore this little tidbit at your own peril.

Oh – and the Consumer?

The negative slant of the fear-mongering will fool those buying into it. You can test the American consumer – but you cannot beat them – period.

By the way – that retail sales level is now (in dollar terms) at all-time highs.

…read ’em and reap…

The chart above shows you that retail sales took a mere 5 months to reach new highs – it took 40 months after the GFC ending in 2009.

Important to Notice: when new highs are hit in the data – going all the way back to the beginning –we never look back.

“But Mike, that can’t last…because (fill in the blank)”

Really? This is the same crowd of consumers who have collectively put aside nearly $19 Trillion for a “rainy decade” ahead. Wait until we collectively decide to be, say, $14 Trillion worth of afraid instead of $19 Trillion.

“Boom”is all that comes to mind.

But let’s just keep that to ourselves.

In a word for America: unstoppable.

You know what America does when they get stressed? They go shopping. Expect records to be shattered in this upcoming Holiday Shopping Season.

High Level Review

So we all know the bad stuff. We are inundated with it 24-hours-a-day. The strong-minded, disciplined and patient investor pays a steady focus on the higher horizon ahead. Standing tall in the storms is imperative in meeting long-term goals, even when it hurts sometimes.

So what’s the good stuff?

ISM’s solid

Manufacturing solid

Supply chains coming back to the US

Business openings exploding

Small business optimism and forward-looking hiring plans

Auto production fully recovered

Tech washing over every sector of the market

Earnings and Margins set to shock people a year or so down the road

Massive cash levels serve as future fuel at higher prices

Generation Y just beginning to buy homes – with 20 more years of that to go…

Look for increasing family formations and marriages as the next stage

…in essence – the US economy, thanks to all of us collectively never quitting – is nearly completely off the leash.

I know that sounds like rose-colored-glasses type thinking. We try hard to have clients think in very long-term perspectives…beyond the chop and waves on the surface.

Let everyone else be thrown off their pathway – you can stay on yours.

Alas, one gains confidence by studying the underlying dominos falling our way…set for years and years to come.

Green Shoots?

Earnings continue to surprise. The Q3 data is improving each week – with 96 companies announcing this week.

But here is the thing: look at the pace of improvement being seeded already for Q4:

The Zacks tracking data above show you that the pace of reduction is falling rapidly when looking at YOY data comps. think about it — 6 months after a complete global shutdown and companies will only see a 12% YOY earnings reduction 3 months out?

It is continued evidence that improvement and recovery is happening far more quickly than most understand.

The Latest From Refintiv for 2021?

The latest forward 4-quarter estimate rose this week again – to $156.78 from $156.08 last week. Keep in mind that once we hit year-end 2020, we will see the 2021 number bump by about $10 – suggesting a $166/share number already for 2021 as we sit now.

This allows for no continued improvement which we expect as the small business community creates more and more new jobs in recovery. Do note that this $166 is higher than the records set in 2019.

Not too shabby for a global lockdown, millions of jobs lost from shutdowns and a pandemic. Speaking of the pandemic, take a guess as to how many medical studies are underway right now – across the globe – to find treatment solutions for COVID?

Answer: more than 2000.

Open bet: A year or so down the road, thanks to massive medical, scientific and technological investments and know-how, this virus will have more successful treatments approved than any other virus in the history of mankind.

Taking Flight…

Which brings us to the final sign (for today) that we are all unstoppable. You may recall in the early days of the lockdown, “no one was ever going to get on a plane again…” chatter filled the air. It was the same after 9/11 – Good Lord, we were told, who would ever fly again? Well – we did – and in record amounts…

We are coming back. Here is the latest from the TSA throughput data. Yesterday was a milestone.

The first travel day with over 1,000,000 flyers since March 16. Slowly, steadily, surely…we overcome:

Date: Total Travel Throughput Total Travel Throughout 1-Yr Ago

10/18/2020 1,031,505 2,606,266

10/17/2020 788,743 2,049,855

10/16/2020 973,046 2,637,677

10/15/2020 950,024 2,581,007

10/14/2020 717,940 2,317,763

10/13/2020 680,894 2,313,632

10/12/2020 958,440 2,616,771

10/11/2020 984,234 2,555,333

In Summary

The Grim Reaper will keep coming. Don’t fret.

When he knocks on the door of your mind and stokes your fears — laugh at him and look forward – not back.

This rocket-ship ride is just getting loaded up for the trip.

Long-term investors have learned that when all of the above ingredients are baked into the pie, the road ahead has been marked by a clear and resounding message:

…surprises to the upside.

It is our job to withstand the assured storms ahead and be disciplined in our planning for clients’ goals.

Sure, more choppy waters are likely as the earnings season unfolds ahead. Oh – and we have that election thing too.

The media will do their best to knock you off your focus, grabbing at your fears and taking you off your pathway.

Rise above that tension and pull your seatbelt tighter. Exciting things are dead ahead.