Happy Monday! It might still be three weeks until Labor Day, but it’s the first day of school here in this Omaha household. 

  • It’s been an amazing summer on many fronts, including my wife and I hiking 30 miles in one day last week in Glacier National Park with several dozen financial advisors, financial service executives, and Orion’s own master hiker Eric (and his wife Jill) Clarke (who finished near the front of the pack).  Here are some incredible pictures from Chip's and Skip's 10th Annual Excellent Adventure. 
  • It’s also been an amazing summer (and year) for the US stock market. Last Friday, for instance, was the 48th record close for the S&P 500 in 2021. All of the significant issues that have come up have been swatted away like mosquitoes. The surge in Delta variant cases is a real problem. The associated plunge in consumer sentiment is another. Chinese economic concerns, Afghanistan, federal deficits, extreme weather and more also can’t seem to stop the market (yet). Nonetheless, US stock market keeps moving higher, more new all-time highs are being reached, and even Europe hasn’t had a down day in its stock market in two weeks.  
  • Last week, one consumer sentiment number (University of Michigan) fell to its lowest levels since 2011. It was also one of the sharpest one-month drops in sentiment.  Needless to say, the number came in well below expectations. Possible explanations include concerns over Delta, slower job growth, and higher inflation.
  • Then again, there are positive reasons for higher stock prices. This includes the US earnings season that has been as strong versus expectations as any in the past 20 years so far.  Below is a graphic from Bespoke Investments that shows how strong this season has been.  The 80% revenue beat rate is the best in over 20 years.  The 75% earnings beat rate is nearly so.

  • Ten year Treasury yields basically finished unchanged on the week at 1.30%, after hitting an intra-day high of 1.38% during the week.  On August 4th, 10-year yields had a handle of 1.12%.
  • Bitcoin meanwhile is back on the rise again and closed last week at $48k. This is basically back at three-month highs with prices up over 60% during that time. One thing I guessed early this year is that we would get crypto ETFs before year-end (heck, Canada now does!) and while it looks like I’ll be wrong with each passing day, here's another voice that thinks we could have a Bitcoin ETF before year-end. 
  • Potential market moving events this week include Tuesday’s Retail Sales. Expect a deceleration. This is from the aforementioned lower consumer sentiment, never mind the difficulty of maintaining the prior torrid pace.  We also get earnings reports from Walmart and Target this week that will also shed more light on consumer spending. In addition, we will get the minutes from the Federal Open Market Committee’s (FOMC) July meeting on Wednesday, getting an update on the Fed’s thinking about the strength of the economy and insight into the trimming of the bond buyback program.
  • Heck, if Halloween stores are already opening, that also means it’s not too early to start thinking about what books to buy for this year’s holiday gifts. Here’s another one (and already read and approved by some on the investment team):  “"Big Mistakes: The Best Investors and Their Worst Investments" by Michael Batnick.   Some good excerpts include:
    • “You need patience, discipline, and an ability to take losses without going crazy.” — Charlie Munger
    • “The best lesson investors can learn from one of the best to ever do it is that there are no good times without the bad times. Big losses are in the fabric of long‐term investing. And if you’re not willing to accept them, you will not harvest the long‐term returns that the market has to offer.” – more Charlie Munger
    • “There are two times in a man’s life when he should not speculate, when he can’t afford it, and when he can.” — Mark Twain
  • Speaking of resources, the “Stocks, Bonds, Bills and Inflation ® (SBBI®): 2021 Summary Edition” is now available.
  • On this week’s episode of Orion’s The Weighing Machine podcast, we interviewed arguably one of the most well-known quant portfolio managers in the profession: Harin de Silva.  De Silva manages the 361 Global Long Short Equity Fund. BTW,  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.
  • Since we’re talking Weighing Machine, I might as well mention one of my favorites that I follow on Twitter is our own Chief Behavioral Officer Daniel Crosby.  Do you know he has nearly 30k Twitter followers?  That’s 15x more people that are in the town I was born in.  Here was a tweet he had last week that for some reason I like ?
Have a great week!

2297-OPS-8/16/2021

Chart source: Bespoke Investments 08/13/21

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