Earnings-Driven Stock Records Amid Frightening Inflation: Fritz Meyer, November 2021

Despite supply chain problems and higher costs, positive earnings surprises and forward guidance have led analysts to raise their estimates for the fourth quarter of 2021 and the four quarters of 2022. Earnings are driving the stock market to record levels. Some strategists are calling it a market melt-up.

Meanwhile, hearkening back to the double-digit inflation of the early 1980s, the terms “stagflation” and “hyperinflation” are being invoked. Drawing on history, at this class we analyze the unique drivers of The Great Inflation of 1965-82, which are not present today. As reflected in the 10-year Treasury breakeven rate, investors mostly agree with the Fed that higher inflation will prove temporary.

Charts and graphs designed by Fritz Meyer illustrate key fundamentals, including:

• The consensus economic forecast is for a sharp pickup in fourth quarter GDP growth, following the Delta Variant’s drag on third quarter growth.
• Strength in a wide range of fundamentals, including:
• October Consumer Income and Spending
• Manufacturing and Service Sector
• Home Construction
• Forward-looking U.S. LEI
• Consumer Cash Accounts (M2) astounding still 

Financial markets also are analyzed in a series of illustrations of valuation charts eloquently explained to reinforce, refresh, and refocus professionals on the most important financial economic facts advisors need to know now, including:

• The Fed’s valuation model indicates stocks are valued reasonably compared to bonds.
• With the lowest bond yields in history and negative inflation-adjusted bond returns, the stock market’s earnings yield is relatively quite attractive.
• Forecasts made by top market strategists’ at the beginning-of-year versus how the year is actually turning out.

This webinar is eligible for one hour of CE credit towards the CIMA® and CPWA® certifications, CFP® CE, PACE credit toward the CLU® and ChFC® designations, and live CPA CPE credit.

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