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Insights & Manager Commentary

Churchill Management - Commentary

by Craig Love, on September 29, 2021

  • The market’s attention appears to be firmly focused on the timeline for the withdrawal of monetary stimulus.
  • Concerns abounded heading into the Jackson Hole Symposium on August 27. Wall Street watchers speculated on how and when the Federal Reserve would tighten – especially if tightening labor market conditions and inflation would force the Fed to act sooner.
  • Chairman Jerome Powell dispelled those concerns. He emphasized that employment has much more room for improvement, while also imparting a high level of confidence that the current inflation spike is temporary.  
  • After Powell’s speech, we saw the markets surge, especially the high-beta growth names in the technology sector.
  • The market’s positive reaction, however, was short-lived. This week in their own speeches and interviews, many of the Fed chairman’s peers emphasized the need to start tapering asset purchases sooner rather than later. 
  • On the virus front, the number of Covid cases surged over the last couple of months as the Delta variant made its rounds. The markets have paid it little heed, remaining quite resilient, with most of the major indices in or around their all-time highs.
  • The action in the market remains bullish. Most of the major large cap indices remain close to their all-time highs as the mega cap tech stocks continue to buoy the indices. 
  • The focus remains on the pace of the recovery and inflation. That will dictate the speed of any reduction in monetary stimulus.
  • The big concern will likely be when policy becomes restrictive, which appears to be far from now. For now, we are staying the course.

Regards,

CHURCHILL MANAGEMENT GROUP

Source: Churchill Management Group

info@churchillmanagement.com 

** 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.

Topics:Churchill