Market Moment
Glen Eagle®: America’s Women-Owned Trading Desk®  

  • The small-cap Russell 2000 index has increased 5% so far in November compared to just 1.7% for the S&P500. The outperformance is due to the fact that 1) small-cap stocks have outperformed large-cap companies during inflationary periods since 2010 2) the earnings of companies in the Russell 2000 are projected to have grown 475% year-over-year compared to just 42% for the S&P500 and 3) the small cap index has a higher weighting of companies in the energy, financials, and industrial sectors, which tend to do better in economic recoveries.
  • Last week Johnson & Johnson announced that it would spin out its consumer health division. Currently, this division represents just 16% of the firm’s revenue. Pharma and medical devices will continue to trade under ticker JNJ and generate 84% of revenue. As JNJ trades at a 16x earnings multiple, JNJ hopes this split will allow the consumer health division to realize a higher multiple in line with other peers such as Procter & Gamble (P/E 24) 
  • Add a record 4.4 million people quitting their jobs along with the 10.4 million current job openings in September and you can understand wages inflation of this year - a record 4.9%. Despite this, inflation has led the real earnings of Americans to actually decrease. One in four consumers now report inflationary reductions in their living standards.
  • After averaging 10% growth between 1978-2010, and 7.3% the last decade (excluding 2020), China’s economy is expected to grow just 5.6% next year. The US stock market, seems to be ignoring this slowdown, with the basket of top 50 US companies with the most sales in China trading one standard deviation above its historical valuation. With only 5% of revenue generated by S&P companies attributable to China, there is less of concern for the US markets to be impacted by China's slowing growth.
WSJ – Inflation Bets Give a Boost to Small-Cap Stocks
Barrons – Johnson & Johnson Stock Is Gaining Because 2 Companies Might Make More Sense than 1
Reuters – US Workers Quitting Reaches Record High, Job Openings Edge Down in September
Barrons – U.S. Companies Face New Risks in a Changing China. What That Means for the Stocks.


Economic Calendar

Monday: Empire State manufacturing index (Nov)
Tuesday: Retail sales (Oct), Import price index (Oct), Industrial production (Oct), Cap utilization (Oct), NAHB home builders index (Nov), Business inventories (Sept)
Wednesday: Building permits (Oct), Housing starts (Oct)
Thursday: Phila.Fed manufacturing index (Nov), Leading economic indicators (Oct)
Friday: None scheduled
US Futures
S&P 4688 +0.21%
DOW 36,105 +0.26%
NASDAQ 16,231.75 +0.24%

World Markets
FTSE 7341.58
NIKKEI 29,776.80 +0.56%
HANG SENG 25,380.90
3 Mo 0.066%
10YR 1.548%
30 YR 1.927%

Euro $1.1454
Pound $1.3418
Yen $113.87

Gold 1865.80
WTI Crude 80.18 -0.76%
Silver 25.31

Upcoming Earnings Calls

Monday - OTLY, WE, EDR, LCID
Tuesday - HD, WMT
Friday - No Notable

Client Focused Trading® for large institutions, pensions, hedge funds, wealthy families, and private equity for over 30 years.

Glen Eagle Wealth, LLC is a member FINRA and SIPC
This desk commentary is for informational purposes only

Ansie Monaghan
Carol Ann Fernandez

Glen EagleWealth, LLC
4422C Route 27
PO Box 399
Kingston, NJ 08528
(609) 631-8231

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