Fed Unveils Tapering Plans

October 18, 2021

A strong opening to the third-quarter earnings season sparked a late week, broad-based rally that helped stocks finish the week with solid gains.

The Dow Jones Industrial Average rose 1.58%, while the Standard & Poor’s 500 added 1.82%. The Nasdaq Composite index led, gaining 2.18% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, was up 1.37%.¹

Investor Optimism Returns

After beginning the week on a lackluster note, stocks turned higher on Wednesday as companies kicked off a new earnings season and details about the Fed’s taper plans emerged. Investor enthusiasm shifted into high gear the following day on positive economic data and earnings reports that exceeded investor expectations. Buying continued through Friday on fresh earnings surprises and a better-than-expected retail sales report.

The economic data allayed some concerns about inflationary pressures and economic deceleration, while early earnings results provided hope that companies had weathered the surge in summer Covid infections. Nevertheless, worries about how supply-chain disruption and higher prices may impact corporate earnings guidance haven’t gone away.

Let the Tapering Begin

Minutes from September’s Federal Open Market Committee released last week provided detail around the Fed’s plans to taper its $120 billion monthly bond purchase program. The Fed expects to reduce its purchases by $15 billion each month, beginning in mid-November/December and ending in June 2022.⁴

This tapering schedule is somewhat faster than what investors were anticipating, reflecting the Fed’s concern that inflation has been somewhat higher and more persistent than it had anticipated, with continuing supply-chain bottlenecks raising that risk level. Fed Chair Powell’s commitment to transparency and advanced signaling of policy changes appeared to have worked, as markets greeted the news calmly. In fact, stocks rallied strongly the following day as yields moved lower. 

This Week: Key Economic Data

Monday: Industrial Production.

Tuesday: Housing Starts.

Thursday: Jobless Claims. Existing Home Sales. Index of Leading Economic Indicators.

Friday: PMI (Purchasing Managers’ Index) Composite Flash.

^{Source: Econoday, October 15, 2021
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.}

This Week: Companies Reporting Earnings

Tuesday: Netflix, Inc. (NFLX), Johnson & Johnson (JNJ), Procter & Gamble (PG), Kansas City Southern (KSU).

Wednesday: Tesla, Inc. (TSLA), International Business Machines (IBM), Verizon Communications (VZ), Abbott Laboratories (ABT), United Airlines (UAL), CSX Corporation (CSX).

Thursday: AT&T, Inc. (T), Intel Corporation (INTC), Snap, Inc. (SNAP), PPG Industries, Inc. (PPG), Southwest Airlines (LUV), American Airlines Group, Inc. (AAL), Union Pacific Corporation (UNP), Chipotle Mexican Grill, Inc. (CMG), Danaher Corporation (DHR), Dow, Inc. (DOW).

Friday: American Express Company (AXP), HCA Healthcare, Inc. (HCA), Schlumberger Limited (SLB).

^{Source: Zacks, October 15, 2021
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.}

HCM-BUYLINE® STILL POSITIVE, ARE THE BEARS OVEREXTENDED?

September and October are historically volatile months, yet the HCM-BuyLine® remains positive.  We expect the market to stabilize and move higher into year-end. When bearish bets are near records and inverse ETF volumes are at all-time highs, we are bullish.³

READ MORE HERE

^{This communication is issued by Howard Capital Management, Inc. It is for informational purposes and is not an official confirmation of terms. It is not guaranteed as to accuracy, nor is it a complete statement of the financial products or markets referred to. Opinions expressed are subject to change without notice.} 

How to Research Tax-Exempt Organizations

The IRS makes it easy to check various organizations’ status to ensure that they are eligible to receive tax-deductible contributions. It provides a tool, Tax Exempt Organization Search, which allows users to research an organization quickly and easily, using information such as the organization’s name, Employee Identification Number, and location.

In addition to finding out whether an organization is eligible to receive tax-deductible donations, users also automatically can see whether any organizations’ tax-exempt status has been revoked (which happens if they don’t file their required Form 990-series for three years in a row), as well as access IRS determination letters that recognize the organization as tax-exempt, among other information.⁴

^{* This information is not intended to be a substitute for specific individualized tax advice. We suggest that you discuss your specific tax issues with a qualified tax professional.}

What Are Alkaline Foods, and How Can They Benefit You?

Eating healthy foods and exercising are two of the main components of a healthy lifestyle, but maintaining a healthy pH level is another one. All foods are classified as acidic or alkaline, and knowing which ones are which can help you lose weight, reduce inflammation, and have more energy. Our kidneys are responsible for controlling our body’s pH levels, and focusing on an alkaline diet may help them do their job more efficiently.

Alkaline foods include legumes, vegetables, fruits, nuts, and natural fats. An alkaline-based diet focuses more on these foods and less on processed foods, dairy, grains, and alcohol, all of which are acidic.

While there's still some debate over whether or not the alkaline diet is all it’s cracked up to be, you may enjoy more health benefits because the diet is rooted in eating whole, unprocessed foods.⁵

Roasted Butternut Squash and Bacon Soup

Ingredients

• 1 butternut squash (about 3 pounds), peeled, seeded and cut in 1-inch chunks
• 1 onion, diced
• 1 red bell pepper, chopped
• 4 slices bacon, diced
• 2 tablespoons olive oil
• 2 cloves garlic, minced
• Kosher salt and freshly ground black pepper, to taste

For the soup

• 4 slices bacon, diced
• 1/2 teaspoon dried thyme
• 2 1/2 cups chicken stock, or more, to taste
• 1/4 cup crumbled goat cheese
• 2 tablespoons chopped chives

Directions

1. Preheat oven to 400° F. Lightly oil a baking sheet or coat with nonstick spray.
2. Place butternut squash, onion, bell pepper and bacon in a single layer onto the prepared baking sheet. Add olive oil and garlic; season with salt and pepper, to taste. Gently toss to combine.
3. Place into oven and bake for 25-30 minutes, or until butternut squash is tender, stirring at halftime.*
4. Heat a large skillet over medium high heat. Add bacon and cook until brown and crispy, about 6-8 minutes. Transfer to a paper towel-lined plate.
5. Heat a large stockpot or Dutch oven over medium heat. Add butternut squash mixture and thyme, and cook, stirring occasionally, until fragrant, about 1-2 minutes; season with salt and pepper, to taste. Stir in chicken stock and puree with an immersion blender.
6. Bring to a boil; reduce heat and simmer until slightly thickened, about 5-10 minutes. If the soup is too thick, add more chicken stock as needed until desired consistency is reached.
7. Serve immediately, garnished with bacon, goat cheese and chives, if desired. ⁶

^{*Baking time may need to be adjusted depending on the size of the squash.}

Stay safe!

Footnotes and Sources

^{1. The Wall Street Journal, October 15, 2021}

^{2. The Wall Street Journal, October 13, 2021}

^{3. Howardcm.com, October 14, 2021}

^{4. IRS.gov, February 26, 2021}

^{5. healthline.com, June 24, 2021}

^{6. damndelicious.net, December 10, 2014}

^{Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.}

^{The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice.}

^{This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG is not affiliated with the named representative, financial professional, Registered Investment Advisor, Broker-Dealer, nor state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and they should not be considered a solicitation for the purchase or sale of any security.}

^{Copyright 2021 FMG Suite.}

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