Killarney


<p>By Michael O’Connor&nbsp; &nbsp;</p>



<h3>Markets are officially on a roll, with the S&amp;P 500 and the Nasdaq notching multiple record-high closes in recent weeks.</h3>



<p>Much of the recent uptrend following a difficult September has been driven by a solid Q3 earning season. The S&amp;P 500 has rallied 9% in recent weeks as 82% of companies within the index beat earnings estimates, well above the 69%, 15-year average. As we move forward, the comp figures will become more difficult to beat, but unwavering demand looks set to support earnings into the future.</p>



<h3>Inflation Scare</h3>



<p>In news that will hardly be surprising to anyone who has stepped foot inside a grocery store over the last six months, inflation across a broad swath of products that consumers buy every day hit its highest point in more than 30 years.</p>



<p>The October consumer price index figures, which monitor a basket of products ranging from petrol and healthcare to groceries and rents, rose 6.2% from a year ago. While much of this recent inflation is thought to be transitory, given current supply constraints, these higher-than-expected figures put inflation and the need for tighter monetary policy firmly back on the radar.</p>



<h3>Musk&#8217;s Twitter Machine</h3>



<p>Tesla stock fell almost 20% in two days after Elon Musk indicated he would sell 10% of his stake in the company off the back of a Twitter poll.</p>



<p>If he does, it will trigger what would surely be one of the largest capital gains tax liabilities for an individual in history — a cool $6.7 billion.</p>



<p>In true Musk fashion, he took to Twitter on Saturday and proposed selling 10% of his Tesla stock, worth roughly $21 billion. The masses voted in favour of the sale with a 58% majority.</p>



<p>While Musk framed to poll as a response to the democrat&#8217;s proposal to tax unrealised stock gains of US billionaires, looking to cash out during seemingly overbought conditions is hardly surprising.</p>



<p>Tesla&#8217;s Market Cap jumped over $200 billion off the back of a $4 billion Hertz contract announcement that has yet to be signed, hard to argue with the idea of banking some gains.</p>



<h3>Zoom&#8217;s Rise and Fall</h3>



<p>Zoom&#8217;s precipitous decline continued, finishing the week down 6.2%. After peaking in October 2020, Zoom has lost roughly 55% of its market value, falling from $588 to $260 a share in just over a year.</p>



<p>Even though Zoom&#8217;s financial results continued to impress through much of 2021, growth is starting to slow, and the collapse of the proposed acquisition of Five9 has hampered the company&#8217;s attempt to diversify revenue.</p>



<p>While Zoom&#8217;s demise might sound strange, given the work-from-home environment many of us still find ourselves in, when markets fully price in all future growth potential, it only takes a little nudge in the other direction to trigger enormous moves.</p>



<h3>Market Outlook</h3>



<p>Zoom serves as a reminder that while the stock market valuations continue to steadily increase at an index level, if you zoom out..(pun intended)&#8230;substantial volatility remains at the stock level.</p>



<p>Stocks like Peloton, Zillow and Moderna cratered last week as the indexes steadily climbed to all-time highs.</p>



<p>The Nasdaq composite index is up over 24% year-to-date, but if you look a little closer, 50% of the companies within the index have experienced a 20% correction at some point during the year, while 20% of the companies within the index have experienced a 50% correction or more.</p>



<p>Volatility is alive and well, but an index-driven market makes it appear like everything just keeps going up.</p>


The $21 billion Twitter poll

DOWNLOAD AND XPLORE