Weekly Market Commentary - October 14th, 2021

The Markets

The week started with the S&P 500 experiencing daily gains and losses of about one percent. Other major North American indices saw sizeable daily swings in value, too. Lu Wang of Bloomberg reported:

“The harrowing reversals reflect a particularly stark divide between bull and bear cases in markets right now. On one side, risk appetites are being constricted by lingering uncertainty over the [U.S.] government debt ceiling, tightening Federal Reserve policy and disrupted supply chains. At the same time, sentiment is being buttressed by improving trends, an economy that keeps chugging along and forecasts for more double-digit earnings growth from corporate America.”

Considering how volatile things were early in the week, investors were remarkably sanguine about Friday’s less-than-stellar employment report from south of the border. The U.S. Bureau of Labor Statistics indicated that less than 200,000 jobs were created in September, compared to estimates of 500,000. The employment rate suffered as a result of widespread layoffs of employees across the United States who refused to comply with the Biden administration’s mandates. 

At the same time, small businesses continue to feel the squeeze, especially in areas and industries where customers are required to present proof of vaccination in order to be served, such as restaurants in New York, which the New York Times reports currently employ about 40 percent less staff than before the pandemic, and continue to have difficulty finding staff and sufficient customers to turn a profit. 

Consumers, investors, and central bankers are also expending a lot of energy worrying about power – the kind that’s generated by natural gas, oil, coal, wind, sun and other sources. Supply and demand issues in energy markets have caused prices to rise and is contributing to rising inflation.  

Major North American indices finished the week higher, although the Nasdaq Composite’s gain was just 0.1 percent. If you have any questions or concerns about current market conditions or your investment portfolio, please don’t hesitate to give us a call.

Upcoming Webinar:

Click Here To Sign Up!

Click here to read our Blog.

Click below to find us in Social Media

Low Energy

Currently, there is a mismatch in global energy supply and demand. In some places, it is creating issues that countries haven’t experienced in some time. For instance:

• In Europe, the cost to heat the average home rose about fivefold from September 2020 to September 2021, according to The Economist.

• In India, where about 70 percent of electricity is generated by burning coal, coal supplies are running low, according to Arunoday Mukharji of BBC.

• In China, rolling blackouts have implemented to address an electricity shortage, reported Peter Hoskins of BBC.

• In Lebanon, power plants went offline over the weekend and the country is expected to be without power for several days, reported Laila Bassam of Reuters.

• South of the border, oil prices are at a seven-year high, and the price of gasoline was above $3 a gallon. In some places, it was above $5 a gallon, reported Pippa Stevens of CNBC.

There are many reasons for the current energy shortage, reported Will Englund of The Washington Post. “The economic recovery from the pandemic recession lies behind the crisis, coming after a year of retrenchment in coal, oil and gas extraction. Other factors include an unusually cold winter in Europe that drained reserves, a series of hurricanes that forced shutdowns of Gulf oil refineries, a turn for the worse in relations between China and Australia that led Beijing to stop importing coal from Down Under, and a protracted calm spell over the North Sea that has sharply curtailed the output of electricity-generating wind turbines.”

The energy shortage may be more challenging to overcome than some other types of shortages, opined The Economist, because investment in fossil fuels has been declining as the world moves toward lower emissions and greener energy sources. “The long-term challenge is to smooth out volatility as the switch to renewables continues.”

Weekly Focus - Think About It

“Do I contradict myself?
Very well then I contradict myself,
(I am large, I contain multitudes.)” 
—Walt Whitman, poet

Best regards,