A look at some of the headlines for 2021:
- Covid looks to resurge mid-summer
- Political differences are deepening in Washington, the debt ceiling looms
- Dozens of container ships remain stuck in U.S. ports
- Employment shortages threaten to lengthen the reopening of economy; could stall recovery
- Steel and lumber prices have eased somewhat but still high, fueling inflation concerns
- Semiconductors are in limited supply or on backorder
Based on these headlines, one might think the economy is heading straight for a recession which would likely lead to stock prices crashing.
Headlines tend to skew how we think regardless of the subject matter. I’ve said many times negative headlines sell newspapers, magazines and frankly the same can be said of most podcasts, cable, and network news sources. For the record I do read / view a variety of all the above weekly. To me most over emphasize what I refer to as negative reinforcement.
Sources* I review daily show two critically important economic drivers, corporate revenues and earnings, have continued to surprise to the upside for 2021 and continue through the 3rd quarter (90% reported as of the date of this writing) with estimates for both to continue moving higher into 2022. Could that change? Sure. But right now, based on current data including the two corporate fundamentals pointed out above, the near-term remains favorable for the economy.
When it comes to the stock market, don’t let the day to day changes, volatility, spook you. It’s likely to continue. We’re still working our way through the challenges brought on by covid. But based on what I read, the challenges facing our economy are easing by the month which, in my opinion, gives this bull more room to run.
As we enter the holiest of seasons on the Christian calendar, spend time with family, friends and in prayer. May His birth and ultimate sacrifice be the center piece of your holiday season.
‘til next time….. ”Stay Nimble, Be Tactical and Know What You Own®”
*ZRS – YCharts