Vertical-Home

The challenges are the same the markets have faced for the last few weeks. Is inflation transitory or will it strangle our economy? When will the service sector see workers return to fill much needed jobs? These issues need to be resolved before investors feel more comfortable about the direction of the stock market.

With 95% of S&P 500 companies having reported first quarter 2021 results, it appears revenue growth will be in excess of 10%. More interesting is where the growth in revenue is taking place. The chart below from FactSet shows that companies with greater than 50% of their revenue coming from international sales is growing at almost double that of companies who sales are greater than 50% coming from domestic operations.

The important point of this is, economic recovery is now happening on a global basis. The healthier foreign economies are, the healthier the U.S. economy will be. We need our trading partners to recover from the pandemic’s effects as much as we need ours to. This is great news that didn’t get much press last week. Keep a close eye on how the world’s major economies continue to reopen for business.

If you have any questions, please contact me.

The Markets and Economy

Companies that hoarded cash for the last year during the pandemic are now increasing share buybacks and increasing their dividends. U.S. corporations have authorized $504 billion of share repurchases according to Goldman Sachs Group data through May 7, the most during that period in 22 years.
According to the IRS, the top1% of all wage earners, those making at least $540,009, paid 40% of all federal income taxes collected in 2018.
America’s home-buying frenzy is cooling off as limited inventory and record high prices are excluding potential buyers.
Companies are weighing a faster return to the office in light of recent CDC guidelines. The new guidance says Americans who are vaccinated no longer need to wear masks and observe social distancing in most instances.
In early May, U.S. service business saw their sharpest increase in activity in more than a decade. Restaurant dining, travel and entertainment saw their preliminary activity index hit 70.1 in May, up from April’s reading of 64.7.
The use of margin debt jumped from $479 billion in March 2020 to $823 billion in March 2021. Margin debt is when an investor borrows against their stock and bond holdings to leverage their market exposure.

Offices in Chicago, Kansas City, St. Louis, Naples & Valparaiso.

The Standard & Poor’s 500 (S&P 500) is an unmanaged group of securities considered to be representative of the stock market in general. The Dow Jones Industrial Average is a price-weighted index of 30 actively traded blue-chip stocks. The NASDAQ Composite Index is an unmanaged, market-weighted index of all over-the-counter common stocks traded on the National Association of Securities Dealers Automated Quotation System.

Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

Consult your financial professional before making any investment decision. You cannot invest directly in an index. Past performance does not guarantee future results.

Note: All figures exclude reinvested dividends (if any). Sources: Bloomberg, Dorsey Wright & Associates, Inc. and The Wall Street Journal. Past performance is no guarantee of future results. Indices are unmanaged and cannot be invested into directly.

Securities offered through Triad Advisors, member FINRA/SIPC. Investment advice offered through Resources Investment Advisors, LLC, an SEC-registered investment adviser. Resources Investment Advisors. LLC and Vertical Financial Group are not affiliated with Triad Advisors.

David Kover on May 24th, 2021

Prev Posts Next Posts

Economic Growth Taking Place Globally