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Below is a look at a handful of charts published this week that we thought were interesting or noteworthy. Additionally, we included a few quotes from Corporate America that we heard on earnings calls this week that have implications for the broader economy. Receive charts and analysis like this in your inbox daily by signing up for a two-week trial to Bespoke Premium.
As earnings season unofficially ended this week, we took a look back at the S&P 500’s performance during the season. Despite the numerous headwinds supposedly facing the economy, earnings reports were generally strong this quarter, and the market reacted positively. As you can see, we significantly outperformed the average earnings season performance since 2010.
Although performance has been strong as of late, bullish sentiment pulled back to normal levels this week. Bullish sentiment from the weekly AAII sentiment reading pulled back by 9.2 percentage points, which is the largest week over week decline since September 16th. However, the reading of 38.8% is within one percentage point of the historical average.
Typically, consumer sentiment and quit rates tend to be correlated, as employees feel more comfortable quitting when they are confident in the economy. However, there has been a divergence between these two readings recently. This may be in part due to the labor shortage experienced by the economy, and although consumers have a reduced sentiment, employees still feel like they can easily find another job.
COVID cases have ticked up recently in North America and Europe. In today’s Morning Lineup, we discussed the lockdowns being initiated by regions within countries like Austria and Germany. The last thing our supply-ridden economy needs is lockdowns, so this will be an important development to watch moving forward.
Rivian (RIVN) IPO’d recently and caught the eyes of many investors. Remarkably, it took Tesla 2,407 trading days to reach a $100 billion market cap versus just 3 trading days for Rivian. Although the cause of this is uncertain, it appears as if investors do not want to miss the next Tesla and are willing to pay up massively for exposure to EV producers.
Although traditional auto manufacturers currently sell over 98% of vehicles globally, EV companies now make up more than 40% of global automaker market cap! This separation between revenue and market cap may point to the general froth in the market, and leaves some investors concerned about current valuations on a broad basis.
Throughout this earnings season, we have been reporting on and summarizing select conference calls for our Bespoke Institutional subscribers. Here are some of the notable quotes from this week’s calls with implications for the broader economy:
NVIDIA CFO Colette Kress stated, “Last week, we announced general availability of Omniverse Enterprise, a platform for simulating physically accurate 3D world and digital twins. Initial market reception to Omniverse has been incredible.”
Target CEO Brian Cornell commented, “We don’t expect those supply chain challenges that go away as we go into the start of next year… I think they will dissipate overtime…we know that we’re going to still face some supply chain challenges as we go into 2022.”
Home Depot COO Ted Baker added, “We are also seeing rising cost pressures across several different product categories.”
Walmart CFO Brett Biggs commented, “Despite the various macro and industry challenges, our inventory position is good. Stores and fulfillment centers are well staffed and our price position remains strong.”
Tyson Foods CEO Donnie King stated, “Labor has been very challenging throughout the year, but as we’ve mentioned in the script earlier, we are seeing a light at the end of this tunnel, we’re seeing our ability to get plant staff… we are almost fully staffed since November 1st.”
To see the summaries of the earnings reports we covered, you can login if you’re a member or start a two-week Bespoke Institutional trial.
In addition to this earnings coverage, you will also have access to our recently debuted Little Known Stocks (LIKS) report as an Institutional subscriber. On Wednesday, we published our fourth LIKS report.
In these reports, we provide an in-depth breakdown of a stock that likely remains under the radar of most investors. In this week’s report, we analyzed a company that operates in a space that has been experiencing massive growth with no signs of slowing down. Through 2025, this industry is expected to grow at a whopping 68% per year, and this company has grown its revenue at a rate of 24% per year over the last four years. Again, you can start a two-week trial to Bespoke Institutional to see this LIKS report and others.
That’s it for this week. Have a great weekend and we’ll be back at it on Monday!