Positive 2nd Half Expectations
In honor of Summer and relaxation, we need to celebrate the good things in life. If you pick up a newspaper or watch the news, life as we know it is at an end. However, the Beach Boys famously said, "I'm picking up good vibrations." That's what Summer is all about. We need to look at the forest and not necessarily the trees. Fear is always around the corner and the media loves to stoke the latest panic (i.e., Delta variant). When we look at the data and employ some common sense, we see there are green shoots in the economy and life is slowly getting back to normal. Henry David Thoreau once said, "Think for yourself, or others will think for you without thinking of you." Let's walk through the latest on the markets.
Last week we experienced an up and down market, driven primarily by language in the latest Fed minutes release from the June meeting. The minutes were parsed over like the statistics in a World Series game. In the end, the Fed basically said we're not close to tapering bond purchases yet, but that day is coming. Most analysts agree that the Fed will forecast in September when tapering will begin and that will likely start in the 1st quarter of next year. Meanwhile, Jobless Claims inched higher after dropping in 10 of the last 13 weeks. The employment trends as measured by the Conference Board showed improvement overall and despite the Services indices declining, they are still at levels of overall economic expansion. Consumer Credit also increased, showing that the U.S. consumer is alive and well.
Second quarter earnings for companies are expected to set some records. If the actual numbers come in close or exceed those expectations, there's a good chance equities will move higher in response. Second quarter GDP is also expected to some in higher at 7.9%. We'll find out later this month what the actual number is, but again, if it's close, that's good for stocks. The re-opening data is also looking strong as Retail Sales are higher than 2019 levels. Hotel occupancy and Restaurant dining have reached pre-pandemic levels. We are also seeing the first major move higher in Box Office receipts. The ever-present fear stoking by the press over the Delta variant stands in stark contrast to the decline in hospitalizations and deaths.
Click below to access this week's Market Recap.