All data is for the week ended October 29, 2021
Stocks Major US equity indices were positive last week, with the S&P 500 rising 1.35%, the Russell adding 0.27% and the NASDAQ up 2.72%. Overseas, the developed markets (MSCI EAFE) eased 0.10% while the emerging markets (MSCI EM) lost 2.18%. Within the US, growth stocks outperformed value stocks and large caps outperformed mid- and small caps. Consumer discretionary was the best performing sector as managements were more optimistic in the auto and apparel sectors, while financials was the laggard.1
Fixed Income The yield curve continued to flatten as economic growth came in lower than expected and inflation is remains elevated. The 20-year treasury yield declined 8 basis points as the 10-year declined 11 basis points and the 2-year yield was unchanged. The 10-year treasury finished the week at 1.55%.2
Commodities The impact of summer’s drought conditions are likely to be felt in the rising price of meat for the next year or two since cattle farmers have trimmed their herds due to elevated feed costs and poor pasture conditions. The USDA predicts prices for beef, veal and pork to rise 6.5% to 7.5% this year vs. last year.3
Economic Data US economic growth slowed to 2.0% in the quarter ended September, below the FactSet consensus estimate of 3.5% growth.4 This compares with the previous quarterly growth of 6.7%. Resurging numbers of COVID-19 cases resulted in labor and supply shortages, delaying reopening of some businesses, particularly in the vehicle and hospitality industries.5 Total durable goods orders declined 0.4% month-over-month in September and orders—excluding transportation—rose 0.4%. On a year-over-year basis, total durable goods orders were up 23.4%. Excluding transportation, they were up 17.3%. Importantly, the report indicated that there was a pickup in business spending activity in September as well as August.6 Pending home sales declined 2.3% versus a gain of 8.1% in the prior month and below consensus expectations for a slight gain from August to September. On a year over year basis, contract signings were 8% lower. The drop can be attributed to much higher prices with lower availability of labor and materials.7
Company News8 Lockheed Martin Corp. (LMT), a G50 and Core Select holding, reported revenues that were below expectations, an earnings beat, and guided revenues expectations lower for this year and next. Management also said it is in the process of reassessing its five-year business plan. Shares were down 11.29%.9
Merck Inc. (MRK), a G50 and Contrarian Choice holding, shares rose 8.50% for the week after management reported Keytruda and Gardasil drugs both beat expectations in the quarter. Management also predicted that it’s COVID pill would generate $5billion to-$7 billion in sales through 2022.10
Suncor Energy Inc. (SU), a G40i holding, reported revenues and operating earnings that far exceeded consensus expectations. The board of this Canadian energy firm also doubled its quarterly dividend to 2019 levels and boosted its share buyback program. Shares rose 15.05%.11
Did you know… In 1904, President Theodore Roosevelt hunted wolves in Oklahoma with Jack Abernathy, a local legend renowned for catching wolves with his bare hands. After seeing Abernathy in action Roosevelt wanted to clout one himself, but the Secret Service talked him out of it.
Mariann Montagne, CFA Portfolio Manager
Sources: 1 JP Morgan Weekly Market Recap 11-1-21 2 US Treasury 3 Barron’s, “A Holiday Feast is Going to Cost You More. Beef is Leading the Price Hikes” 10-28-21 4 Yahoo.com 10-28-21 5 Bureau of Economic Analysis 10-28-21 6 US Census Bureau 10-28-21 7 National Association of Realtors 10-28-21, National Association of Realtors 9-29-21 8 All weekly changes in company stock prices: Yahoo Finance 9 Lockheed Martin press release 10-26-21 10 Merck Inc. press release 11 Suncor Energy quarterly report
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