In his Daily Market Notes report to investors, while commenting on Facebook, Inc. (NASDAQ:FB) Louis Navellier wrote:
Q3 2021 hedge fund letters, conferences and more
Gates Capital Management's ECF Value Funds have a fantastic track record. The funds (full-name Excess Cash Flow Value Funds), which invest in an event-driven equity and credit strategy, have produced a 12.6% annualised return over the past 26 years. The funds added 7.7% overall in the second half of 2022, outperforming the 3.4% return for Read More
The three major factors that are distracting investors are the U.S. budget deficit ceiling, soaring inflation, and supply chain/port bottlenecks. Regarding the U.S. budget deficit, the deficit ceiling will be lifted by Congress before October 18th, but not before many politicians get to embarrass each other over the federal budget deficit.
We survey our investors each week, and this week’s topic was whether or not now is a good time to invest in stocks. Despite market gyrations, retail investors remain bullish.
The proposed infrastructure bill is now officially dead after the Biden Administration sided with the progressive wing of the Democratic party and alienated the more moderate members in Congress, so there are not currently enough votes in the House of Representatives to advance the proposed bill to the Senate with proposed tax hikes. The fact that taxes are not going up is very bullish for overall economic growth.
The good news is that as inflation continues to heat up and push China and other countries into a recession, the U.S. remains an oasis. The port bottlenecks and supply chain glitches persist, but at least the U.S. is not expected to be crippled by high coal and natural gas prices that are now hindering China and much of Europe.
One of the tragedies of the port bottlenecks is that the pipeline break in the ocean off of Southern California appears to have been caused by a ship anchor, since 4,000 feet of the pipeline was moved after being “pulled like a bowstring.” As a result, some of the big containerships sitting offshore are being investigated by the U.S. Coast Guard as possibly being the cause of the pipeline break.
ISM Services Index Rose To 61.9 In September
The Institute of Supply Management (ISM) on Tuesday announced that its non-manufacturing, service index rose to 61.9 in September, up slightly. All 17 service industries that ISM surveyed in September reported growth, which bodes well for continued strong GDP growth.
However, the Commerce Department on Tuesday announced that the trade deficit widened to a record $73.3 billion in August, up from $70.3 billion in July. The larger the trade deficit, the more economists tend to cut the GDP estimates.
ADP on Wednesday reported that private payrolls rose by 568,000 in September, led by large businesses (with more than 500 employees) that created 390,000 jobs. Naturally, this bodes well for the Labor Department’s payroll report on Friday. Additionally, since companies have over 10 million job postings, employment growth should steadily rise.
The other big news this week was the outage and whistleblower testimony. In the end, Facebook, Inc. (NASDAQ:FB) still has a lot of allies in Congress, so it will be interesting to sell what, if any regulatory action will be taken against Facebook. I suspect that due to the First Amendment, very little action will be taken against Facebook.
The fourth quarter is a seasonally strong quarter that is characterized by positive gains for October, November and December. I should add that January is also a seasonally strong month, so we have four straight months of seasonal strength to look forward to. November is the strongest month in the fourth quarter since we typically get an “early January effect” just before Thanksgiving when small-capitalization stocks seasonally surge. The primary reason that November is such a strong month is that Thanksgiving is a “happy time of year” as we gather with family and friends and kick off the holidays.
Heard & Notable
From January 1926 through September 2021, the annualized total return for the S&P 500 was 10.47% The dividend component consists of 38.25% of the return. Source: S&P Dow Jones Indices.