Bowen Asset Management

The S&P 500 wrapped up its best week since July, closing at its highest level in a month, as a series of upside earnings reports from Wall Street's biggest banks outweighed negative macro sentiment. Financial heavyweights Goldman Sachs, J.P. Morgan and Bank of America were among the firms topping consensus estimates. A rebounding economy allowed banks to release more cash they had set aside for pandemic losses, while equity financing and trading boosted bottom lines. Economic... data also eased some concerns this week, with U.S. retail sales data coming in stronger than expected and initial jobless claims posting their lowest numbers since the pandemic began. Also, according to FOMC minutes released last week, Fed officials signaled last month that they should start reducing emergency pandemic support for the economy in mid-November or mid-December. The program could then end by mid-2022. Economic releases for this week are industrial production on Monday and housing starts and home sales later in the week. See more

Social Security and Supplemental Security Income (SSI) benefits for approximately 70 million Americans will increase 5.9 percent in 2022, the Social Security Administration announced today. The cost-of-living adjustment (COLA) will begin with benefits payable to more than 64 million Social Security beneficiaries in January 2022. https://www.ssa.gov/news/press/releases/2021/#10-2021-2

The opening rounds of the third quarter earnings season begin in earnest shortly, when JPMorgan and other major banks begin reporting quarterly results starting on October 13th. For Q3 2021, the estimated earnings growth rate for the S&P 500 is 27.6%. If the S&P hits that number, it will mark the third highest (year-over-year) earnings growth rate reported by the index since 2010. For some companies, these high earnings growth numbers are coming off a very low base comparison... even beyond Covid impact. The forward 12-month P/E ratio for the S&P 500 is 20.1. This P/E ratio is above the 5-year average (18.3) and above the 10-year average (16.4). While Q3 revision trends have remained positive, the dramatic growth trends are slowing sequentially. At the sector level, the Information Technology sector has the highest number of companies issuing positive EPS guidance and positive revenue guidance of all eleven sectors for the quarter. See more

DO you have questions about the US debt ceiling, how it works and its history? Check out our report: https://bowenasset.com/mind-the-ceiling-the-debt-limit-dra/

The markets are waiting for J. Powell, Fed Chairman to speak this afternoon at the conclusion of the Fed’s most recent 2-day meeting. Following the fiscal stimulus packages, it is inevitable that Fed GDP forecasts will be revised up at some point, and some FOMC members might think rates will have to move higher sooner than they anticipated last December. The Fed is aiming for higher inflation which means higher interest rates. But how high and how quickly is the question. Wha...t is in the statement, the projection materials and what Chair Powell says in his press conference about inflation will be closely watched and parsed. Retail sales for February were released on Tues. Sales fell 3%, the 5th largest month-month decline since 1992. However, 3 things negatively impacted sales: the storms in Texas, the $600 stimulus checks that went out in early Jan and were mostly spent in Jan and the revisions upward of Jan retail sales from an initial estimate of a 5.3% increase to an increase of 7.6%. We expect a rebound in the March numbers as the recent stimulus checks are in the mail and bank accounts. Check out our website: https://bowenasset.com/

On this day, March 8,1817, the New York Stock and Exchange Board was formed. The name was shortened to The New York Stock Exchange (NYSE) in 1863. The NYSE is home to more than 2,800 companies whose combined value exceeds $15 trillion. In the beginning, The New York Stock Exchange's origin can be traced all the way back to the signing of the Buttonwood Agreement on May 17th, 1792. That agreement was struck by a group of 24 stockbrokers and merchants at 68 Wall Street, under a buttonwood tree. Originally, there were five securities traded in New York City with the first listed company on the NYSE being none other than the Bank of New York. Today, the New York Stock Exchange (NYSE) is the second largest stock exchange in the world after the NASDAQ. Check out our website at: https://bowenasset.com/

Unemployment figures for Feb were released on Friday. Most of the job gains occurred in the leisure and hospitality sector, which includes restaurants, adding 355,000 jobs. There were smaller increases in temporary help services, manufacturing and healthcare. The gains reflect reduced business restrictions, more people receiving vaccines, a lower level of Covid-19 infections and a recent round of government aid to households and businesses, which boosted consumer spending ear...ly this year. Despite Feb gains, the leisure and hospitality sector have 3.5 million fewer jobs than a year earlier, showing the recovery is far from complete. Overall, the U.S. has 9.5 million fewer jobs than a year earlier, just before the coronavirus pandemic took hold. Still, millions of workers who lost their jobs last year are struggling to find work, especially in their prior fields. More workers counted themselves as permanently unemployed, rather than on temporary layoff, in Feb and the number of people out of work for six or more months increased for the 10th straight month. As for the actual numbers, the economy added 379,000 jobs in Feb. better than the 210,000 economists were looking for. Jan jobs gain was revised to up 166,000 from up 49,000. The unemployment rate ticked down to 6.2%. The rate is well below a near 15% pandemic peak in April 2020 but remains above 2019’s 50-year lows. Check out our website: https://bowenasset.com/ See more

Facing deep budget shortfalls, state and local governments have shed 1.3 million jobs since the pandemic began last year a loss of more than 1 in 20 government jobs. Check out our report on debt: https://bowenasset.com/the-debt-who-owes-and-how-will-it-a/

Traders appear to be paying close attention to forecasts and corporate views of the economy as earnings season kicks off this week with the big banks reporting on Friday, January 15. Analysts estimate S&P 500 earnings fell by 8.8% year-over-year in the fourth quarter. This would represent the third-largest year-on-year drop in earnings for the index. Earnings for S&P 500 companies overall are expected to jump over 20% in 2021. Check out our website: https://bowenasset.com/

The Labor Department report Friday showed the jobs market has deteriorated as 140,000 jobs were lost in December with unemployment rate remaining at 6.7%. Factors for the slowdown are driven by the coronavirus. Cities and states instituted new restrictions on businesses in efforts to get control of the virus as the worst of the winter sets in and deaths and hospitalizations hit record highs. Congressional efforts for a second round of stimulus failed until an anemic response... at the end of December. Yet the market pushed higher as investors focus is on the rollout of vaccine which offers a chance to return to some sort of a normal life. A new issue of market uncertainty surfaced when the President actively called his supporters together during the certification process of the state votes, attempting to overturn votes in certain states by relying on evidence largely vetted and dismissed by the judicial branch. This appears to be an attempt to disrupt our fragile democracy resulting so far in five deaths just 13 days before the expected inauguration of the new president. No matter what side of the politics you may be on, this is a very big deal and it is difficult to guess the market impact. Investors prefer stability. Check out our web site at: https://bowenasset.com/

On Friday, the government will report unemployment figures for December. The anticipated number is 6.5% down from 6.7% in November. Unemployment claims have been rising again in recent weeks to their highest levels since the autumn as surging coronavirus rates have slowed hiring and led to more layoffs. At current levels, the weekly claims figures are almost four times their pre-pandemic average. Because of the recent weekly reported figures, it is expected that the numbers may disappoint. Also, we are seeing more and more closures as the virus continues to be totally out of control. That argues for a weak number. Check out our website: https://bowenasset.com/

On January 6, 2021 at 1 p.m., the new 117th Congress will meet in joint session to count the Electoral College votes in the 2020 presidential election, won by Joe Biden, 306-232, over Donald Trump. This is usually a pro forma event, little noticed except by the most devoted followers of political pageantry. However, this year there will be drama, as at least one senator and scores of representatives plan to challenge the results from some swing states. Each chamber will be re...quired to separately debate the objections for a maximum of two hours. (This is not an unusual part of the process; such attempts at challenges have occurred before, most notably following the 2004 election, when Republicans decried it as a travesty.) For an objection to any state's votes to succeed, both chambers must agree with the objection. It is unlikely that the House, controlled by Democrats, will agree to any challenge. Still, if the debate goes on for the maximum time allowed, it is possible that the vote count will not be finished until the early morning of January 7. In the end, the president of the SenateVice President Mike Pencewill fill out his purely ceremonial role, stating the result of the Electoral College vote and any floor vote. The Electoral College result will stand. President Joe Biden and Vice President Kamala Harris will be sworn in at noon on Inauguration Day, January 20, 2021, and the new administration will begin. Check out our recent piece on Counting the Electoral Votes https://bowenasset.com/the-next-show-counting-the-electora/

The Senate on Friday passed a one-week spending bill that will prevent a government shutdown, giving the White House and Congress another week to negotiate a broader set of spending measures. The vote came just hours before a midnight deadline. The bill had already passed the House of Representatives. The measure still has to be signed into law by President Trump, which he is expected to do. Congress has for months known about the looming expiration of government funding, but... lawmakers sought to use the deadline to force action on a long-stalled emergency economic relief package. With the stimulus talks now bogging down, congressional leaders have scrambled to approve a one-week continuing resolution to buy more time to hammer out the elusive deal. Also, lawmakers still have not reached an agreement on how to fund the federal agencies beyond the stopgap bill. They are expected to use the one-week extension to try and resolve their differences over that as well. Check out our website at: https://bowenasset.com/ See more