Milan Cacic
October 08, 2021
Money Economy Commentary Trending Weekly updateMARKET UPDATE - August 13th 2021
The stock market appears to be unconcerned about lockdowns and the Delta variant judging from the new all-time highs. Perhaps it’s assuming that the US will follow in the UK’s footsteps. The UK had a massive surge in COVID-19 cases without locking down and now that surge has rolled over without producing a wave of hospitalizations and deaths.
The market’s forward P/E ratio has not moved for more than a year now. Earlier in the year, market growth was driven by multiple expansion and now it appears to be driven by earnings growth. If we look at Q2 earnings, it’s clear to see that earnings season is on fire. The year-over-year growth rate in Q2 estimates is up 40% (from the start of earnings season) to +94% today.
The bigger question is “Will the market rotate back to value?” or “Will growth lead us forward?”. If the market sees past the Delta variant in the fall (there will likely be a rise in cases) then value will likely win out. Stock and sector selection will be paramount this fall!
I have also include a piece from our CIBC Economics Team entitled “Who’s closer to the finish line?”.
As always please give us a call if you have any questions.
Have a great weekend.
Milan