Europe Is Ignored: The S&P500 has returned close to 3x better returns than Euro Stoxx 50 over the past decade (6x if you exclude dividends). The US has continued this outperformance in recent months, but some are wondering about the logic. Currently, the S&P500 is expected to have earnings growth of 25% year-over-year, whereas Europe is expected to realize something closer to 33%.
Stuck No More: The Ever Given has been freed from the shore with the assistance of 14 tugboats. While still blocking the critical Suez Canal passage, there is hope the continued efforts to correct its course will allow resumption of transit. Currently, $9.7B of goods are being held up as vessels await passage through the waterways. Oil and gas markets are expected to volatile this week with the drama continuing and OPEC+ meeting.
Long-Term Perspective: A study by BTN research showed that if you look at the S&P500 performance in terms of days from 1950 through 2020 it was up 54% of the time and down 46% of the time. However, if you instead look at all 10-year rolling time periods the S&P500 was down only 11% of those time periods and up 89% of the time. Clearly having a long-term perspective can yield positive returns.
Looking for Chips: The increase in demand for technological products during the quarantine, the destructive winter weather in Texas, and the recent fire in a Japanese semiconductor plant have all led to a global chip shortage. The negative effects of this shortage will likely be felt by the automobile industry and consumer electronics companies such as Apple. Conversely, companies that produce equipment used by semiconductor plants (ex: Applied Materials, Lam Research) may benefit as companies try to ramp up production.
Economic Calendar
Monday: N/A
Tuesday: National home price index - Jan, Consumer confidence index - Mar
Wednesday: ADP Employment index (Mar), Chicago PMI (Mar)
Thursday: Markit manufacturing PMI (Mar), ISM Manufacturing index,
Construction spending (Feb), Motor vehicle sales (Mar)
Friday: non-farm payrolls (Mar), Unemployment rate (Mar), Average hourly earnings (Mar)
