Weekly Market Commentary

1/10/22 CAN CORPORATE AMERICA KEEP IT ROLLING?

Jeff Buchbinder, CFA, Chief Equity Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial 

Corporate America has been on quite a run. Coming into 2021, S&P 500 Index companies were expected to generate less than $170 in earnings per share. As 2022 begins, it looks like that number may end up higher than the latest LPL Research estimate of $205, one of the biggest earnings upside surprises ever and a big reason why stocks did so well last year. But 2021 earnings are not yet fully in the books. We have one more quarter to go, which we preview in this week’s commentary. 

Weekly Market Commentary

1/3/2022 THREE 2021 MARKET LESSONS FOR 2022

Barry Gilbert, PhD, CFA, Asset Allocation Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Jeffrey Buchbinder, CFA, Equity Strategist, LPL Financial Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financial 

In many ways, 2021 was a typical year for markets, but it also reinforced some basic market lessons that are hard to learn, even if they are not new. As we launch into the New Year, we’re highlighting three 2021 market lessons that we think may matter for 2022: 1) equity valuations are a poor timing mechanism, 2) structural forces have a large influence on interest rates and may keep them relatively low, and 3) politics and markets don’t mix. 

Weekly Market Commentary

12/27/21 HOW MUCH HIGHER CAN TREASURY YIELDS GO?

Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial

We expect interest rates to move modestly higher in 2022 based on near-term inflation expectations above historical trends and improving growth expectations once the impact of COVID-19 variants recede. Our year-end 2022 forecast for the 10-year Treasury yield is 1.75–2.00%. An aging global demographic that needs income, higher global debt levels, and an ongoing bull market in equities may keep interest rates from going much higher.

Weekly Market Commentary

12/13/21 Economic Outlook 2022

Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Barry Gilbert, PhD, CFA, Asset Allocation Strategist, LPL Financial

We believe pent-up demand, gradual improvement in supply chain challenges, solid labor force
growth, and productivity gains will all contribute to another year of above-trend economic growth in
2022. COVID-19-related risks remain and the potential for a policy mistake may be elevated as the
economy moves towards normalization, but we think the overall environment will be supportive of
business growth and ultimately equity markets.

Weekly Market Commentary

12/6/21 WILL OMICRON RUIN THE SANTA RALLY?

Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Jeff Buchbinder, CFA, Equity Strategist, LPL Financial

Historically, December has been a great month for stocks, but now we have the Omicron variant causing major volatility and uncertainty. Still, we remain optimistic that the new worries will subside over the coming weeks and stocks will finish 2021 on a solid note.

Weekly Market Commentary

11/29/21 THREE REASONS TO BE THANKFUL

Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Scott Brown, CMT, Senior Analyst, LPL Financial

There are only six weeks to go in 2021 and it has been an incredible year for the stock market bulls. In fact, in many ways it could go down as one of the best years ever. This week, in honor of Thanksgiving, we wanted to take a closer look at three reasons to be thankful. From the stock market to the economy, there are indeed many reasons to be thankful this year.

Long Term Care

11/23/21 November is Long Term Awareness Month

Advanced planning can help alleviate some of the physical, emotional, and financial challenges associated with those requiring long-term care.

With the average U.S. lifespan trending higher over the past several decades, the number of men and women over the age of 65 requiring some level of long-term care (LTC) services is on the rise. To educate the public about the need to prepare for their financial futures, the American Association for Long-Term Care (AALTC) established November as National Long-Term Care Awareness Month. Enjoy the article and contact us if you have questions about YOUR long term care.

Weekly Market Commentary

11/15/21 A Peek at Peak Inflation: Five Signals to Watch For

Barry Gilbert, PhD, CFA, Asset Allocation Strategist, LPL Financial
George Henry Smith, CFA, CAIA, CIPM Senior Analyst, LPL Financial

After an upside inflation surprise in October, it’s clear that peak inflation may still be ahead, possibly even pushing into 2022. While the Federal Reserve (Fed) maintains its position that elevated inflation will be transitory, we have yet to see progress. We look at five signs to watch for over the next several months that may signal that inflation may be near or at its peak.

Weekly Market Commentary

11/8/21 DEVELOPED INTERNATIONAL: IF NOT NOW, WHEN?

Jeffrey Buchbinder, CFA, Equity Strategist, LPL Financial
Scott Brown, CMT, Senior Analyst, LPL Financial

Since we began our investing careers, we’ve had the concept of diversification drilled into our heads. Some refer to it as the only free lunch in investing. Well, when it comes to geography, that advice hasn’t been helpful for some time (you could say the same about value-style investing). Staying close to home and favoring the United States won’t always be the best move, but for now, we think it still is.

Weekly Market Commentary

11/1/21 Five Things That Spook Markets

Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Jeffrey Buchbinder, CFA, Equity Strategist, LPL Financial
Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financial
Barry Gilbert, PhD, CFA, Asset Allocation Strategist, LPL Financial

With Halloween over the weekend, what better to write about this week than what scares us? If our positive near-term market outlook proves to be overly optimistic, we believe one—or perhaps more than one—of these five things will likely be the culprit: inflation, an aggressive Federal Reserve, profit margin pressures, pulling forward of seasonal gains, and potentially overly bullish sentiment.

Weekly Market Commentary

10/25/21 Bullish Setup Into Year-End

Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Scott Brown, CMT, Senior Analyst, LPL Financial

The S&P 500 Index has gained more than 20% so far this year, making more than 50 record highs along the way. Certainly nobody should be upset with that return if that was all 2021 brought us. However, we see signs that there could be more gains to come in the final two months of the year. Seasonal tailwinds, improving market internals, and clear signs of a peak in the Delta variant all provide potential fuel for equities heading into year-end, and we maintain our overweight equities recommendation as a result.

Weekly Market Commentary

10/18/21 Q3 Earnings Preview: Less Upside

Jeffrey Buchbinder, CFA, Equity Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial

We have used most of the superlatives we know to describe corporate America’s stunning performances over the past two earnings seasons. Despite lofty expections, results exceeded estimates by the biggest margins we’ve ever seen (and one of the authors of this report has been doing this for 23 years). We expect solid earnings gains during the upcoming third-quarter earnings season, but upside surprises will be smaller. Unfortunately, we won’t need as many superlatives.

Weekly Market Commentary

10/11 Answering the Top Debt Ceiling Questions

Barry Gilbert, PhD, CFA, Asset Allocation Strategist, LPL Financial
Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financial

Last week, Congress was able to push back a fast-approaching deadline for raising the debt ceiling to December. Markets applauded the move with a relief rally. Despite decreased uncertainty in the near term, we may be confronted with the same problem again in a couple of months. This week we look more closely at the role the debt ceiling plays in government financing, what could happen if the debt ceiling is not raised in a timely way, and why market participants were skittish about the approaching deadline as we look ahead to December.

Weekly Market Commentary

10/4/22 Early Thoughts on 2022

Jeffrey Buchbinder, CFA, Equity Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial

With the fourth quarter underway—historically the best quarter for stocks, by the way—2022 is fast approaching. While a lot can still happen between now and the end of 2021, we don’t think it’s too early to start thinking about what stocks might do next year. We see a favorable economic environment for stocks in 2022, consistent with prior mid-cycle expansion years and bolstered by continued earnings growth. The gains may not come easy, however, with a number of risks such as COVID-19-related supply chain disruptions, inflation, and higher interest rates.

Weekly Market Commentary

9/27/21 To Z or Not to Z: Why the Shape of Recovery Still Matters

Barry Gilbert, PhD, CFA, Asset Allocation Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Jeff Buchbinder, CFA, Equity Strategist, LPL Financial

LPL Research is downgrading its 2021 U.S. GDP growth forecast from 6.25–6.75% to 5.75–6.25%. Growth is likely to come in at an annualized pace near 5% over the second half of the year. So, while expectations have been tempered, the recovery still has a lot of momentum, which is likely to extend well into 2022. In 2022 we may see economic growth exceed potential, creating a Z-shaped recovery— something we haven’t really seen since the early 1970s. What is a Z-shaped recovery and what might it mean for the Federal Reserve (Fed), inflation, and markets? We attempt to answer those questions in this week’s commentary.

Weekly Market Commentary

9/20/21 REVISITING OUR 10-YEAR TREASURY YIELD FORECAST

Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial

Until recently, we expected the 10-year Treasury yield to end the year between 1.75% and 2.0%. Now, however, there are two key elements suggesting we are unlikely to see significantly higher interest rates by year end: The Delta variant’s impact on economic growth expectations, and the continued demand for U.S. Treasuries by foreign investors. As such, our new year-end target for the 10-year Treasury yield is between 1.50% and 1.75%.

Weekly Market Commentary

9/13/21 POLICY RISKS LOOM BUT CLARITY AHEAD

Barry Gilbert, PhD, CFA, Asset Allocation Strategist, LPL Financial
Lawrence Gillum, CFA, Fixed Income Strategist, LPL Financial
Jeff Buchbinder, CFA, Equity Strategist, LPL Financial

Several policy-related risks loom in September and October that may lead to an increase in market volatility. The debt ceiling needs to be raised (likely by mid-October), the government needs to be funded to avoid a shutdown by the end of September, and the Democrats are trying to pass two major spending bills and will need to provide greater clarity on tax increases over the next several weeks. We believe the greatest risks come from the debt ceiling and taxes, but expect neither to have much near-term impact on the general trajectory of the bull market.

Weekly Market Commentary

8/30/21 Poking the Bear

Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Jeffrey Buchbinder, CFA, Equity Strategist, LPL Financial
Scott Brown, CMT, Senior Analyst, LPL Financial

First and foremost, this week’s commentary should not be construed to suggest that we are saying stocks will go up forever. We are also not saying that stocks are immune from a pullback in the final four months of 2021. Corrections are a normal part of investing and the S&P 500 Index has yet to pull back even 5% so far this year, something that happens on average three times per year. However, we remain steadfastly bullish and this week want to explore five things that some bears believe that do not worry us.

Weekly Market Commentary

8/23/21 WHY STAGFLATION ISN’T IN THE CARDS

Jeffrey Buchbinder, CFA, Equity Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial
Scott Brown, CMT, Senior Analyst, LPL Financial

The term stagflation has been circulating increasingly in the financial media as inflation readings have risen sharply in recent months. The term is often associated with the 1970s, which saw runaway inflation—largely driven by sky-high energy prices—and lackluster economic growth. Stagflation and a return to the weak equity markets of the 1970s would be understandably scary. However, when looking at the data, we remain skeptical that either runaway inflation or low growth are right around the corner, much less both at the same time.

Weekly Market Commentary

8/16/21 Corporate America Does It Again

Jeffrey Buchbinder, CFA, Equity Strategist, LPL Financial
Ryan Detrick, CMT, Chief Market Strategist, LPL Financial

Corporate America did it again. Companies blew by estimates and made strategists and analysts look silly (though we humbly suggest that we may have looked less silly than most in our earnings preview on July 12). S&P 500 earnings growth did not surprise by quite as much as in the first quarter, but came pretty close—boosted by the biggest quarterly upside revenue surprise in at least 13 years. Here, we recap the strong numbers and raise our forecasts for earnings and for S&P 500 fair value at year-end.