Our Favourite ETF Sector Trades – 25 October 2021 Update
- By John Tierney
- 5 min read
The S & P 500 has climbed 4.5% from the early October low, on the elixir of good earnings that (so far) more than offset the negative message of the Atlanta Fed GDPNow projection of a meagre 0.53% 3q GDP print. Other consensus forecasts from the Conference Board and Blue Chip Economic Indicators are in the 3.5% range. Given ongoing signs that the US and global economy are slowing even as the Fed signals that it is on track to starting tapering its bond purchase program consensus forecasts may well fall further.
In normal times a slowing economy should not bode well for equities – but these are hardly normal times. If many companies are able to up productivity due to labour shortages and manage to gain some pricing power due to ongoing supply constraints earnings in coming quarters could be surprisingly robust. Over the next week there will be a heavy load of earnings coming, which could do much to show whether a broad swathe of companies can indeed perform even as the supply lines and the broader economy struggle.
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