Earnings Beats Near Record Highs, the Financial Sector’s Long Recovery, and is Equal-Weight Construction Poised for a Comeback?
May 12, 2021 | FIRESIDE CHARTS
The breadth of earnings beats in Q1 is near record highs, but how much of that achievement is the product of a pandemic-induced low bar? Strong performance from banks was a large contributor to this outperformance and has helped push the financial sector to break above its 2007 peak, while also appearing undervalued in comparison to the broader market. The growth and value factors meanwhile have stepped out of sync to an extent not seen since the dot-com crash, and we’re eyeing a pattern in when equal-weight indices have outperformed their market-cap weighted counterparts. And as rates and market-based inflation expectations continue to climb, could a similar pattern from ’95-’00 offer any insights into what may lie ahead for equities?
1. Great news tempered by the pandemic’s “panic-reduction” in earnings estimates. Or is this indicative of the best it can get?
Source: The Daily Shot, from 5/11/21
2. It took 14 years, but banks are back and financials hit a new high:
Source: Trust Advisory Services, from 5/12/21
3. Interesting. A very small data set, but the last time the correlation between value and growth plunged like this was right before the Dot-Com crash.
Source: Lohman Economics/ Bloomberg, from 5/11/21
4. It has been a long time coming, but is equal weight finally going to have its day in the sun?
Source: S&P Global Market Intelligence, from 5/12/21
5. While differences abound, what can we learn from previous markets?
Source: The Daily Shot, from 5/12/21
6. This chart on inflation expectations looks similar to commodities and stocks. Rising rates don’t matter…until they do. Everyone has their own trigger point…
Source: The Daily Shot, from 5/11/21
7. The Great Recession and Covid have kept a lid on inflation here and even in emerging economies. Is this about to revert to the “norm” of 30 years ago?
Source: The Daily Shot, from 5/12/21
8. While China’s CPI remains subdued…
Source: The Daily Shot, from 5/11/21
9…They too are seeing large increases in production costs. Will these increases get passed along to consumers (including here in the U.S.)?
Source: The Daily Shot, from 5/11/21
10. As the debate becomes more and more politicized, the fact remains that businesses are having a difficult time finding workers at the low end of the pay scale:
Source: The Daily Shot, from 5/12/21
11. Do you and your families know this?
Source: Statista, from 5/12/21
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.