Factset Research October 4, 2021

  • Despite recent risk-off sentiment, still thoughts there are a number of reasons to buy the dip. While Fed about to start tapering, still on track to add $400B+ to financial system by middle of next year. Q3 earnings expected to grow nearly 30%, recent quarters have seen big beats and companies expected to highlight a very strong demand backdrop as they report results over the next few weeks (and continue to ramp up their capital returns). Economic data have recently started to beat depressed expectations and some expect high frequency economic data to start to inflect higher with improvement in Covid trends. While path to additional fiscal stimulus still complicated, gap between progressives and moderates has narrowed. Also some pushback against fiscal cliff concerns given strong consumer balance sheets and a big chunk of unspent pandemic funds at state and city level. Q4 seasonality another positive.