The News headlines recently have been dominated by the new virus variant dubbed delta. Extremely contagious, it’s said on average one person can infect nine others, but with similar morbidity factors to the regular way flu.  Those that need worry are the very elder, the very obese, and anyone with co-morbidity concerns.

The initial market reaction was negative, the thought- economies will slow and consumer spending would be impacted, but these concerns appear to have abated as we enter the heart of earnings season.  Moreover, the population at large will likely not stand for the same public policy prescriptions that were put in place during the last go round, no business destroying lock downs.  So, the market has climbed this wall of worry issue and is now focused squarely on economic factors and company-specific outlooks.

Thus far, earnings have been excellent.  The big are getting bigger (big Tech), supply constraints have been a more significant factor than demand issues (semiconductors), and powerful secular forces are evident in results (software infrastructure/cloud).  At issue then is investor willingness to pay for this growth, at what multiples should these equities trade?

As long as the growth rates persist, and in some cases accelerate, the bull market will carry on. And while often equities pause in their appreciation as investors digest the earnings results, particularly after run ups ahead of reports, we see nothing to suggest an end to this market run.

Carry on…..

Bruce