Neuberger | Berman - Commentary
by Craig Love, on November 01, 2021
Our observations on recent and upcoming developments of interest to investors.
1. Biden Introduces New Social-Spending and Climate Framework
- After extended negotiations with Congressional Democrats, President Biden unveiled a pared-down $1.75T spending proposal that includes funding for climate change measures, child care and universal preschool. House progressives were reportedly displeased with the cuts from his original $3.5T proposal and refused to vote on his separate $1T infrastructure package, which he had hoped would be approved prior to attending the Glasgow climate summit.
- Democrats mulled various taxes to fund the new spending, including a proposed annual tax on billionaires’ imbedded capital gains. Biden’s new plan would establish a 15% corporate minimum tax, and impose tax surcharges on annual individual income above $10 million (5%) and $25 million (another 3%). (Bloomberg).
- 56% of S&P 500 companies have released Q3 earnings, of which 82% and 75% had a positive surprise on EPS and revenues, respectively. (FactSet)
- Earnings growth is now expected at 36.6% for the quarter—potentially the third-highest YoY rate since 2010. (FactSet)
- Tech company results last week were mixed. Microsoft exceeded forecasts as its cloud-based software sales increased 50%. Alphabet also outpaced expectations but disappointments on YouTube ad revenue and Google Cloud sales hampered results. Apple noted potentially lasting supply constraints, while Amazon missed expectations on higher wages and supply chain issues, among other headwinds. (FactSet)
3. U.S. Growth Disappoints, but Confidence and Stocks Move Higher
- The U.S economy grew at 2% annually in Q3, missing the Bloomberg survey median estimate of 2.6%. The Delta variant and persistent supply chain disruptions likely contributed to the softer figure.
- U.S. consumer confidence increased in October following three months of declines as COVID-19 cases continued to ease. The Conference Board index rose to 113.8 from 109.8 in September and surpassed the 108.0 expected by economists. (WSJ, Bloomberg)
- In another encouraging vaccine milestone, the FDA cleared Pfizer’s shots for use with children age 5 – 11—the first vaccine approved for that group. (WSJ)
- The S&P 500 ended the week up 1.1%, while the MSCI EAFE rose 0.7% and MSCI Emerging Markets fell 1.3%. The U.S. 10-year Treasury yield fell 5 basis points to 1.56% as concerns around slowing global growth and tighter central bank policy persisted.
1. COP26 Climate Summit Continues in Glasgow
- Diplomats from almost 200 countries will seek ways to fulfill climate pledges under the Paris Agreement. The conference runs through November 12.
2. Major Pharma and Biotech Earnings This Week
- Various COVID vaccine developers and biotech companies will announce earnings, including Pfizer (11/2), Amgen (11/2), Novo Nordisk (11/3) and Moderna (11/4). (FactSet)
3. U.S. Home Sales, GDP and Income
- Mon., Nov. 1 – Oct. U.S. Manufacturing ISM is expected to be 60.1, down from 61.1 in Sept. (Bloomberg)
- Wed., Nov. 3 – Oct. U.S. PMI is anticipated at 57.3, up from 55 in Sept. (Bloomberg)
- Fri., Nov. 5 – Oct. U.S. Jobs report is expected to show 400k jobs added, and unemployment falling to 4.7%.
Neuberger Berman Team
Source: Neuberger | Berman