The Profit Margin: January 31, 2022
Statistic of the Week
To be in the top 1% of income earners nationally, a family needs to bring in $597,815 per year. In 2021, the top 1% earned more than double the level to qualify for the top 5%. Connecticut had the highest threshold for membership in the top 1%, while West Virginia had the lowest.
Global Perspective
With tensions high between Russia and Ukraine, it’s important to look at Russia’s grip on Europe through natural gas supplies. Austria, Finland and Lithuania receive 100% of their natural gas from the Russians. Notably, Germany receives more than 50% and France receives more than 20% from Russia.
Market Moving Events
Tuesday: Construction Spending Wednesday: ADP Unemployment Thursday: Jobless Claims, ISM Services Index, Factory Orders Friday: Nonfarm Payrolls, Unemployment Rate
Commentary
Despite a week of volatile trading, all three major US equity indices were able to log gains. The DJIA led the pack, finishing up 1.34%.1 The S&P 500 put in a gain of 0.77%.2 And, a strong rally on Friday allowed the Nasdaq to eek out a gain of 0.01% for the week.3 Yields rose slightly. The 10-year Treasury finished Friday with a yield of 1.78%, up 0.03% from the week prior.4 Last week was filled with news events and economic releases of consequence. US GDP for the fourth quarter (chart right) came in stronger than expected.5 Through Friday, 170 S&P 500 companies had reported earnings; 77% have beaten earnings estimates (by an average margin of about 5%), 68% topped sales estimates, and notably, the average stock response to these positive reports in a “risk off environment”… has been a decline of -1.2%.6 For regular readers, it comes as no surprise that we attribute much of the current volatility to Federal Reserve policy and the corresponding interpretation by investors. Last week’s Federal Reserve announcement seemed to broadly fall in line with expectations, while Fed Chair Powell’s subsequent news conference was viewed as more hawkish than expected. The week ahead is relatively light on key economic releases with the exception of Friday’s nonfarm payrolls. Volatility is likely to persist. – Dan McElwee, CFP, ® MBA
Chart of the Week
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Sources
Statistic of the Week:
CNBC.com
Global Perspective:
The Economist
Market Moving Events:
MarketWatch.com
Chart of the Week:
Haver, Clearnomics, Bureau of Economic Analysis
Commentary:1.Bloomberg2.Bloomberg3.Bloomberg4.Bloomberg5.Haver, US BEA6. Barron’s7.Bloomberg, Investor’s Business Daily8. Investor’s Business Daily9. Investor’s Business Daily