November 12, 2021
Dear friends and valued clients,
The past year and a half have tested us all, but overall the economy continues to strengthen, COVID-19 trends are improving, and this still relatively young bull market is alive and well. As the leaves turn colors and begin to fall to the ground, there are many reasons to be thankful.
The economy slowed considerably in the third quarter (as the growth rate of gross domestic product [GDP] slowed to 2.0% from 6.7% in the second quarter), well below the 10% that was expected back in early June. The good news is – this likely isn’t the start of a new trend. The Delta variant slowed the economy considerably in the third quarter, but growth is expected to pick up in the next few quarters. Big purchases were likely pushed back a few months, which helps the growth outlook for the fourth quarter. Additionally, consumer balance sheets remain very healthy, with trillions of dollars in savings and money market accounts. The consumer, which makes up about two thirds of our economy, is in very good shape heading into 2022.
Supply chain disruptions are being felt all across the country. Goods are taking longer to get to us and costing more than they did in the past, but over the past few weeks, we have seen some signs that the worst of the supply issues may be behind us. Although these issues have lasted longer than most expected, the bottlenecks will continue to work their way out of the system over the coming months and provide relief – something consumers are sure to appreciate.
Earnings drive long-term stock gains and continue to justify stocks at current levels. Third quarter S&P 500 Index earnings have been extremely strong once again, with more than 80% of companies beating estimates (FactSet) and earnings are up nearly 40% from 2020 levels. Yes, many companies have been impacted by the recent Delta variant induced slowdown and supply chain issues, but corporate America remains quite optimistic about the future.
The strong stock market performance this year is yet another thing to be thankful for. In fact, November has been historically the best month of the year for stocks, with the usually strong December right behind it. Although some of the late seasonal gains could have been pulled forward by the 6% gain in October, the bull market is alive and well.
The loss of so many lives and businesses to COVID-19 is a tragedy beyond comprehension, but some recent trends show light at the end of the tunnel. Hospitalization rates are down by more than half from their September peak, suggesting we may be over the worst from the Delta worries. Another reason to be thankful indeed.
This last month and a half will go quickly, as this time of year is always busy – and that’s a good thing because it means we will be that much closer to normal. Please take some time to reflect on all that you’re thankful for. We are all sincerely thankful for the relationships we have with you.
As always, please contact us with any questions.
Dave Schaper, CRPC®, AWMA®
President / LPL Wealth Advisor
Tracking # 1-05208860
This material is for general information only and is not intended to provide specific advice or recommendations for any individual. There is no assurance that the views or strategies discussed are suitable for all investors or will yield positive outcomes. Investing involves risks including possible loss of principal. Any economic forecasts set forth may not develop as predicted and are subject to change.
References to markets, asset classes, and sectors are generally regarding the corresponding market index. Indexes are unmanaged statistical composites and cannot be invested into directly. Index performance is not indicative of the performance of any investment and do not reflect fees, expenses, or sales charges. All performance referenced is historical and is no guarantee of future results.
All data is provided as of November 1, 2021.
Any company names noted herein are for educational purposes only and not an indication of trading intent or a solicitation of their products or services. LPL Financial doesn’t provide research on individual equities.
All index data from FactSet.
This Research material was prepared by LPL Financial, LLC. All information is believed to be from reliable sources; however LPL Financial makes no representation as to its completeness or accuracy.