Monday Morning Market Insights: Last Week in Review with Rusty Vanneman, Vol. 33

Happy Monday!  The summer is quickly winding down and industry conferences and college football seasons are quickly upon us.

  • Last week the stock market finished with a slight loss for the week. Most asset classes were lower last week in terms of total returns, except for diversifiers such as bonds and commodities.  Nonetheless, it should be noted (at least it was by Bespoke Investments last Tuesday), that with “Monday’s record closing high, the S&P 500 is currently on pace to surpass 1995’s record number of closing highs. Outside of 1987, which was a big exception, past years since 1950 with 40 or more record closing highs through 8/16 experienced positive returns through year-end.”  It indeed has been a great year for investors, and even the month-to-date and quarter-to-date numbers are still positive heading into August’s month end.
  • Recent weakness in the market is largely driven by two primary factors: a potential Fed taper (more on that later), and the Delta Variant continuing to impact reopening plans.
  • While caution is warranted (as it always is), the longer-term bullish outlook remains intact.   As succinctly stated by well-known market strategist Ed Yardeni recently: “Earnings have been on fire. My bullishness is based on my perception that there’s no recession ahead, there’s no credit crunch ahead, and there’s still higher earnings ahead.” 
  • Indeed, the second-quarter corporate earnings season is coming to an end, and according to Bespoke Investments, when it comes to US companies, 75% beat “bottom line” earnings per share (EPS) estimates, and 80% beat “top-line” sales estimates.  Also, 20% of companies raised guidance for future earnings, and 5% lowered guidance.
  • Ten year Treasury yields dropped 4 basis points last week to close last Friday at 1.26%.
  • Bitcoin opens the week above $50,000 and back at three-month highs.
  • This week Federal Reserve officials will meet virtually for their annual symposium, instead of their normal location in Jackson Hole, Wyoming.  This could be market moving, depending on what they say about future monetary policy.   If the Fed indicates slowing down bond purchases, this could diminish one of the bigger props for a bullish outlook heading into the latter half of the year.
  • This week will also have housing data and a few more earnings reports from Best Buy and some large tech names.
  • On this week’s episode of Orion’s The Weighing Machine podcast, our guest is Vance Howard from Howard Capital Management.   In short, after hearing this podcast, you’ll see why Vance and Howard Capital has such a dedicated fan club of advisors.   And, as mentioned last week, OPS’s Ben Vaske compiled a list of the walk-up songs for the guests on “The Weighing Machine”: Orion’s The Weighing Machine’s Guests’ Walk-Up Song Playlist.
  • Speaking of Ben, this coming Friday is CFA test day for OPS research analyst Ben Vaske.   Wish him luck!  According to Bloomberg, “only 25% of candidates sitting the Chartered Financial Analyst Level I exam in May passed – the lowest success rate since testing began in 1963. The exam requires at least 300 hours of study. Bloomberg video on how hard CFA is!
  • Last week I interviewed industry legend Larry Swedroe from Buckingham Strategic Partners.  Wow, fun interview.   Larry was gracious to give me nearly 90 minutes – I would have taken more. Look for the podcast to be published in several weeks.  Larry went to the same college (Baruch College) at the same time as one of my mentors (though they didn’t know each other) and I mentioned to Larry I usually post or mention Bernard Baruch’s investing rules every year or so.  I can’t remember the last time I did, so here they are: Bernard Baruch’s Investing Rules.   Perhaps one of the most famous is “Don’t try to buy at the bottom and sell at the top. This can’t be done — except by liars.”
  • For more resources, please check out all the goodies at the Financial Advisor Success Hub, including lots of material from strategic partners and also our own material such as OPS’s Monthly Market View  and OPS Reference Guide.

As always, let us know if you have any questions or feedback on anything we produce, you can reach us at rusty@orion.com or benjamin.vaske@orion.com. Thanks for reading and have a great week!

2359-OPS-8/23/2021

The CFA is a globally respected, graduate-level investment credential established in 1962 and awarded by CFA Institute — the largest global association of investment professionals. To learn more about the CFA charter, visit www.cfainstitute.org.

The CMT Program demonstrates mastery of a core body of knowledge of investment risk in portfolio management. The Chartered Market Technician® (CMT) designation marks the highest education within the discipline and is the preeminent designation for practitioners of technical analysis worldwide. To learn more about the CMT, visit https://cmtassociation.org/.

 

About Rusty Vanneman
Rusty Vanneman serves as the Chief Investment Strategist for Orion Advisor Solutions. An industry veteran with more than 30 years of investment experience, Rusty creates relevant market- and platform-related content that supports deeper, more engaging conversations with advisors and investors, educating key internal and external audiences on Orion Portfolio Solutions’ strategies and resources to help deliver favorable investor outcomes, and helps identify new investment offerings to meet growing marketplace demand. Rusty is a host of Orion’s The Weighing Machine podcast and authored the book “Higher Calling: A Guide to Helping Investors Achieve Their Goals.” Rusty has also managed multiple mutual funds and hedge funds during his career and was named one of the Top 10 Portfolio Managers to Watch by Money Management Executive in 2017. Prior to Orion’s acquisition of Brinker Capital in 2020, Rusty was the Chief Investment Officer for Orion Advisor Solutions and prior to that was the President and Chief Investment Officer of CLS Investments. Before joining Orion in 2012, Rusty served as the Chief Investment Officer and Managing Director for a multi-billion-dollar registered investment advisor (Kobren Insight Management) in the greater Boston area. His 11-year tenure at the RIA included a five-year span when the firm was owned by E*TRADE Financial where he also served as the Senior Market Strategist for E*TRADE Capital. Prior, Rusty was a Senior Analyst at Fidelity Management and Research (FMR Co) in Boston. Additional work experience includes Thomson Reuters, General Electric, and as a cattle ranch hand in the Nebraska Sand Hills. Rusty received his Bachelor of Science in Management from Babson College in Wellesley, Massachusetts, where he graduated with high distinction. He holds the Chartered Financial Analyst (CFA®) designation and is a member of the CFA Institute. He is also a Chartered Market Technician® (CMT) and is a member of the Market Technician’s Association (MTA).