Here’s the weekly rundown
Weekly Summary:
Ready set…trip…
At least, that’s how the market performed this week, welcoming in the first full week of September with losses. As a matter of fact, every day this week was marked by a loss in the S&P, Dow, and Nasdaq, giving us the longest losing streak since February!
That’s right, we have not had 4 consecutive down days for the major indexes since February. A win might I add for 401ks everywhere ?.
So, is this just a case of what goes up must come down, “we were due for it”, or some self-fulfilling prophesy that September is a hard month for stocks?
Not quite.
While the slow start to the week may have been influenced by last week’s horrific nonfarm payroll report. Adding 235,000 new jobs instead of the 730,000 we were expecting.
The real driver this week, and likely the rest of this month, is a slowdown in earnings. But not because of a slowing economy or a lack of demand. Actually, demand is very hot given low the interest rates and ample supply of good-paying jobs.
Rather, earnings are under threat from continued/worsening supply chain problems and increasing raw costs i.e., inflation. Both these issues have been a major point of concern throughout the year but have yet to impact earnings.
Which brings us to this week when we started to see companies cut earnings outlooks. Take Sherwin-Williams for example, a major paint producer, on Wednesday cut its Q3 sales outlook because of “sustained industry-wide raw material availability issues”.
If you don’t like the one-off example of Sherwin-Williams, no worries. Look at this morning’s producer price index (PPI) by the Labor Department, it was 8.3%. This is the highest the PPI has been since 2010.
Cue the adage, “you can’t sell what you don’t have”.
The bottom line, the next few weeks maybe feature more of the above but it’s still possible to end the year higher from where we currently are.
The Major Headlines:
Bitcoin Now Legal Tender
Pay for it in Bitcoin! At least you can in El Salvador which as of Tuesday became the first country in the world to accept Bitcoin as legal tender. This means residents of El Salvador can pay for pretty much anything in the country with Bitcoin if they wanted.
However, there are a few questions left to be answered. Primarily, Bitcoin has never actually been used as a currency before so it’s yet to be seen how business will deal with accepting something whose value is so volatile. -See Article
Pandemic Unemployment Benefits End
As of Monday, the last remaining 24 states that were supplying unemployed residents with an additional $300/week were no longer be able to. Just how many people were still receiving these benefits? More than 11 million. -See Article
Ford’s “watershed moment”
When your industry is about to go through a massive tech transformation lead, follow, or steal people who know tech. That pretty much sums up Ford’s approach to figuring out how to shift their business to the cars of the future.
Tuesday, Ford snagged former Apple executive Doug Field who had been working on major Apple projects including a secret car. Field will lead the development of new a cloud-based connected vehicle platform called Blue Oval Intelligence that allows customers to continually update their cars with new features. –See Article
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