Given that CEA Wealth Management has just redeveloped and upgraded our initial website, we have made it our objective to communicate regularly to keep everyone who is interested in our point of view up-to-date on all thing’s “financial advice”.
The ultimate goal of these regular communications, with you, is to shed some light on either current development in the world from an economic, market or financial perspective as it pertains to the services we offer, or other non-market-related “hand-picked” information to help with your financial literacy.
This first communication will deal with the current state of affairs as it pertains to inflation, third-quarter S&P 500 corporate earnings and the general state of the markets.
I would like to mention that companies report profits as Earnings Per Share, or EPS for short. Generally speaking, this helps us measure a company’s profitability. Positive numbers can illustrate that there is profitability and a rising quarter- over- quarter report can potentially indicate profits are growing.
As the S&P 500 Q3 earnings season draws close to the end, the numbers published on Friday, November 10th, 2023, stipulated that of the 92% of the S&P 500 companies that had reported results, 81% had positive earnings and approximately two-thirds of those companies provided positive surprises. This bodes well for stock market performance even in this persistently high-interest rate environment because the numbers published in Q2 were inferior to this quarter and forward projections for Q4 are improving, according to Factset.
Interest rates remain high as central banks continue to maintain their hawkish stance. This can potentially change, as the Consumer Price Index slowed in October, to 3.2% in the USA and to 4,2 % in the UK, who had its lowest reading of inflation in the last two years, as reported in the New York Times on the 14th and 15th of November, respectively. If this continues and becomes the trend, central bankers will have to rethink their strategy.
These readings in no way guarantee an end to inflation, but do have positive implications, as we are witnessing on the global stock markets’ current performance… Hope springs eternal!
I continue to have a cautiously optimistic view of markets as do many of the managers we employ in our asset allocation models. There are socio-political events that do require our focus and attention as we continue to monitor their effects on the markets. That will be the focus of our next communication.
Sincerely,
John A Leroux
CEA Wealth Management
