Hilltop Wealth Solutions Logo

November 3, 2021 ▫️ Market Update

Equity markets shook off September’s drawdown, with the S&P 500 notching another all-time high at the end of October — returning 7.01 percent in the month and up 24 percent for the year.

While Mid- and Small-Caps lagged in the U.S., they outperformed international markets by a considerable margin as currency impacts weighed on emerging markets.

With just over half of the S&P 500 having reported second-quarter earnings, companies have posted strong results, with the rate of companies beating estimates well above averages. Despite a few high-profile misses from Amazon and Apple, if earnings seasons continued to beat forecasts, it would be the fourth-highest rate of beating estimates since 2008.

Fixed-income markets attempted to digest disappointing economic data, persistent inflation, and a likely imminent Fed announcement on tapering. However, despite these headwinds, the U.S. fixed-income market was essentially unchanged for the month. Also, the yield curve flattened, which helped long-term bonds gain 1.63 percent.

Third-quarter GDP missed expectations with the U.S. economy expanding at a 2.0 percent annualized rate, compared to economist expectations of 2.6 percent.

In the last quarter of 2021, there are reasons to be both optimistic and cautious. While concerns over the delta variant, inflation, supply chain disruptions, and labor shortages remain, low-interest rates and solid corporate earnings provide a foundation of support for equities, and earnings are expected to grow double digits again.

Hilltop Advisors' Perspective

Moving into November means we’ve successfully navigated the trickiest period of the year. September and October are often when markets wobble. However, this year they held onto their gains and remained at or close to all-time highs in some instances.

However, the U.S. economic recovery slowed sharply in the third quarter, as employers struggled to find workers, consumers battled with rising prices, and products remained stranded at ports. And there’s little hope that the supply chain issues will work themselves out anytime soon.

There are also signs that inflation may be more tenacious than initially expected. We don’t believe a return to 1970s-style inflation is likely. Still, there is a scenario in which persistently sharp price increases could be a factor to reckon with — and that the market might periodically reflect investors’ unease. Yet continuing to conceal a list of things to worry about are record stock market levels.

Statistically speaking, we think it’s okay to have a little bit of risk on — even if there’s some volatility associated with it. We believe the markets will accelerate on the heels of good economic data and strong earnings from major companies.

While it looks like volatility will be back — we expect the Fed to announce tapering — they communicated changes to expect with its bond-buying program. The Fed is currently spending $120 billion a month buying bonds but is expected to start a $15 billion a month reduction until it stops completely halfway through 2022.

Do we expect some volatility from tapering? We do. But the primary goal of tapering is to shock the market a little bit. But if history repeats itself, the volatility will be pretty limited for a short period.

The material shown is for informational purposes only and should not be construed as accounting, legal, or tax advice. Hilltop Wealth Solutions is a registered investment adviser with the Securities and Exchange Commission; registration does not imply a certain level of skill or training. While efforts are made to ensure information contained herein is accurate, Hilltop Wealth Solutions cannot guarantee the accuracy of all such information presented.

Website Disclosures

Hilltop Wealth Solutions (“Company”) is an SEC registered investment adviser located in Mishawaka, IN with branch office located in MI and other locations throughout IN.  The Company may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements.  The Company’s web site is limited to the dissemination of general information pertaining to its advisory services, together with access to additional investment-related information, publications, and links.  Accordingly, the publication of the Company’s web site on the Internet should not be construed by any consumer and/or prospective client as the Company’s solicitation to effect, or attempt to effect transactions in securities, or the rendering of personalized investment advice for compensation, over the Internet.  Any subsequent, direct communication by the Company with a prospective client shall be conducted by a representative that is either registered or qualified for an exemption or exclusion from registration in the state where the prospective client resides.  For information pertaining to the registration status of the Company, please contact the SEC or the state securities regulators for those states in which the Company maintains a notice filing.  A copy of the Company’s current written disclosure statement discussing Company business operations, services, and fees is available by going online via the SEC’s Investment Advisers Public Disclosure (IAPD) database at www.adviserinfo.sec.gov, using SEC #801-115255.

The Company does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to the Company web site or incorporated herein and takes no responsibility, therefore.  All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.

Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by the Company, will be profitable or equal any historical performance level(s).

Certain portions of Company web site (i.e. newsletters, articles, commentaries, etc.) may contain a discussion of, and/or provide access to, the Company (and those of other investment and noninvestment professionals) positions and/or recommendations as of a specific prior date.  Due to various factors, including changing market conditions, such discussion may no longer be reflective of current position(s) and/or recommendation(s).  Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or a substitute for, personalized advice from the Company, or from any other investment professional.

The Company is neither an attorney nor an accountant, and no portion of the web site content should be interpreted as legal, accounting or tax advice.

Rankings and/or recognition by unaffiliated rating services and/or publications should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results if the Company is engaged, or continues to be engaged, to provide investment advisory services, nor should it be construed as a current or past endorsement of the Company by any of its clients.  Rankings published by magazines and others, generally base their selections exclusively on information prepared and/or submitted by the recognized adviser.  Rankings are generally limited to participating advisers.

To the extent that any client or prospective client utilizes any economic calculator or similar interactive device contained within or linked to the Company web site, the client and/or prospective client acknowledges and understands that the information resulting from the use of any such calculator/device, is not, and should not be construed, in any manner whatsoever, as the receipt of, or a substitute for, personalized individual advice from the Company, or from any other investment professional.

Each client and prospective client agrees, as a condition precedent to his/her/its access to the Company web site, to release and hold harmless the Company, its officers, directors, owners, employees and agents from any and all adverse consequences resulting from any of his/her/its actions and/or omissions which are independent of his/her/its receipt of personalized individual advice from the Company.

Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the CFP® certification mark, the CERTIFIED FINANCIAL PLANNER™ certification mark, and the CFP® certification mark (with plaque design) logo in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.