Earnings Are Trumping Headline Risks, Market Hits All-Time High and Settles Back

Key Takeaways

  • S&P 500 closed at 4,544.90 up from 4,471.37 last week. The last 10 days have marked the best reaction to earnings of S&P 500 components in the last two years.
  • Despite recent actions by the Biden Administration, clogs in the supply chain are still very bad issues. This may be made worse by the holidays but will eventually alleviate.
  • The VIX amazingly settled at $15.40 today, the lowest level since February 2020.
  • We see dislocations in labor markets and in supply-chains as severe but ultimately transitory. Demand seems to be building insatiably across sections of the economy.

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The market seems to be climbing a wall of worries. There has been turmoil in Washington, a scandal at the Federal Reserve which is casting doubt on Powell’s durability as Chair and the folks that are worried about inflation are getting very loud indeed. The US 5-Year break-even rate hit 2.91% this week eclipsing the last high set in 2005. While inflation is proving higher than expected, Powell says we’re on track for taper.

The airline industry got a boon when the restrictions on some international travel were loosened. We have highlighted a few airlines that have benefited from COVID-19 trends in travel. International Travel volume has been...

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