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Insights & Manager Commentary

Churchill Management - Commentary

by Craig Love, on November 10, 2021

  • Markets recovered quickly and nicely from the pullback in September. All of the major indices saw big gains ranging from 4% to 7% since October 1. 
  • As a result of the positive action, the shallow breadth divergence on the NYSE that had been present since June has now closed.
  • The timing of the confirmation has seemingly given an all-clear signal to a year-end rally as we enter what is seasonally a positive time of the year for equities.
  • The markets have been buoyed by a very good earnings season. With almost 90% of S&P 500 companies having already reported, 81% have beaten their expectations.
    Wall Street also appears to like the Federal Reserve’s plan of action in terms of monetary policy. As expected, the Fed has embarked on the slow march towards normalization. 
  • The only risk to that expectation is if inflation forces the Fed’s hand. While inflation has been high, it will likely be difficult to gauge until we see more evidence of it after the supply constraints recede. 
  • To summarize, based on what we know today, we do not see much in the near-term that is a risk to the markets. Inflation is a story that has yet to be told, and one that is likely unknowable until supply constraints clear up. Monetary policy will remain accommodative for at least the shorter-term.
  • With technicals also improving on top of stellar earnings, odds are that we should see smooth sailing for the markets to the end of the year as we enter what is typically a seasonally positive period of the calendar.



Source: Churchill Management Group 

** This report is meant to inform the reader of our current market opinion, which we, as professional money managers, use in our decision-making. It should be noted that stock market and bond market data are subject to varying interpretations and any one interpretation will not necessarily guarantee investment success. The information obtained from the sources specified herein and used as basis for our current market opinion is believed reliable, but we do not guarantee the accuracy of such information.