Global equities edge up on upbeat earnings; gold falls

October 26, 2021

Running Point and its chief investment officer, Michael Ashley Schulman, CFA, were quoted by Reuters regarding investment market movements and expectations. For more background, the original statement was much longer and similar to some of what Michael had mentioned in his recent weekly posts:

“When what was recently a bankrupt company, Hertz, is able to place a $4.2B order for 100,000 Teslas for its rental fleets, it exemplifies technology again as an enabler for other industries. Traders see [examples such as] this, relatively strong earnings, and other companies taking advantage of low rates to invest in capital expenditures as positive momentum.

“Although there is no lack of Halloween jitters, if one speaks to businesses, demand is strong, credit is available, supply chain hurdles should eventually get fixed, and there are still millions of people that should join or re-enter the U.S. labor force.

“Additionally, there is a lot of concern about inflation, but not much about the differentiation between good inflation and bad inflation. Good inflation happens when a strong economy grows; bad inflation occurs when an economy or government is weak—we are in a growth recovery environment and that has been our position since government stimulus began in March 2020.

“Equities, private real estate, and private credit tend to do relatively well in an inflationary environment because their asset values also often increase and they can usually raise prices or rates; commodities tend to do well at the outset, but often tumble with the increased supply that inevitably comes with higher prices.”

  • * Dow and S&P 500 set new record highs
  • * Gold sheds nearly 1%
  • * Euro STOXX 600 up 0.75% to highest in seven weeks
  • * Dollar index steady
  • * Brent and WTI futures close at highest since Oct 2014 (New throughout, updates prices, market activity and comments to U.S. markets close)

NEW YORK, Oct 26 (Reuters) – Equity markets gained globally on Tuesday as upbeat corporate earnings buoyed investor appetite for riskier investments, while gold prices fell nearly 1%. The three major U.S. stock indexes closed modestly higher on Tuesday, with the Dow Industrials and S&P 500 hitting fresh records driven mostly by technology and healthcare shares. Tech heavyweights Microsoft Corp and Google owner Alphabet Inc both reported third-quarter results that beat Wall Street expectations.

“Traders see this relatively strong earnings and other companies taking advantage of low interest rates to invest in capital expenditure as positive momentum,” said Michael Ashley Schulman, chief investment officer at Running Point Capital.

On Wall Street, Facebook Inc was the biggest drag on the S&P 500 and Nasdaq, after the company warned that Apple Inc’s new privacy changes would weigh on its digital business.

The Dow Jones Industrial Average rose 0.04% to 35,756.88; the S&P 500 gained 0.18% at 4,574.79; and the Nasdaq Composite added 0.06% at 15,235.72. “Even though this has been a good earnings season in aggregate, we are starting to see more companies with supply backlogs, hiring difficulties, and rising input prices that are eating into profits,” Deutsche Bank analysts wrote. Gold prices snapped five straight sessions of gains, shedding nearly 1% as the dollar firmed and strong earnings lowered investor appetite for the safe-haven asset. Spot gold was down 0.85% at $1,792.449 per ounce, while the U.S. gold futures for December delivery settled down 0.7% to $1,793.40 per ounce. U.S. dollar edged up, trading in a narrow range as markets awaited news from upcoming central bank meetings. The U.S. dollar index rose 0.127% at 93.960. U.S. Treasury yields were mixed in thin volume, with those on the long end of the curve falling for a third straight session as investors looked to next week’s Federal Reserve meeting for clues as to the timing of its first interest rate hike in three years. The benchmark U.S. 10-year yield was down at 1.6097%. Oil prices edged up to their highest since 2014, supported by a global supply shortage and strong demand in the United States, the world’s biggest consumer.

Brent futures rose 0.5% to settle at $86.40 a barrel, while U.S. West Texas Intermediate (WTI) crude ended 1.1% higher at $84.65.

Reporting by Chibuike Oguh in New York and Tom Wilson in London; Editing by Steve Orlofsky and David Gregorio

Thomson Reuters

Disclosure: The opinions expressed are those of Running Point Capital Advisors, LLC (Running Point) and are subject to change without notice. This is not an offer to buy or sell or a security or a recommendation to buy or sell a security. Forward looking statements cannot be guaranteed. Running Point is an investment adviser registered with the U.S. Securities and Exchange Commission. Registration does not imply a certain level of skill or training. More information about Running Point’s investment advisory services and fees can be found in its Form ADV Part 2, which is available upon request. RP-21-44

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