• Menu
  • Skip to right header navigation
  • Skip to main content
  • Skip to secondary navigation
  • Skip to primary sidebar
  • Skip to footer

Before Header

Philadelphia Wealth & Asset Management Firm

wealth management

  • Why TBA?
    • Why Tower Bridge Advisors?
    • FAQs
  • Who We Serve
    • Individuals & Families
    • Financial Advisors
    • Institutions & Consultants
    • Medical & Dental Professionals
  • People
    • Maris A. Ogg, CFA® – President
    • James M. Meyer, CFA® – Principal & CIO
    • Robert T. Whalen – Principal
    • Nicholas R. Filippo – VP, Sales & Marketing
    • Jeffrey Kachel – CFO, Principal & CTO
    • James T. Vogt – Senior Portfolio Manager
    • Chad M. Imgrund – Sr. Research Analyst
    • Christopher E. Gildea – Sr. Portfolio Mgr.
    • Daniel P. Rodan – Sr. Portfolio Mgr.
    • Christopher M. Crooks, CFA®, CFP® – Senior Portfolio Manager
    • Michael J. Adams – Senior Portfolio Manager
  • Wealth Management
    • How to Select the Best Wealth Management Firms
  • Process
    • Financial Planning
    • Process – Equities
    • Process – Fixed Income
  • Client Service
  • News
    • Market Commentary
  • Video
    • Economic Updates
  • Contact
  • Click to Call: 610.260.2200
  • Send A Message
  • Why TBA?
    • Why Tower Bridge Advisors?
    • FAQs
  • Services
    • Individuals & Families
    • Financial Advisors
    • Institutions & Consultants
    • Medical & Dental Professionals
  • People
    • Maris A. Ogg, CFA®
    • James M. Meyer, CFA – Principal & CIO
    • Raymond F. Reed, CFA – Principal
    • Robert T. Whalen – Principal
    • Nicholas R. Filippo – VP, Sales & Marketing
    • Jeffrey Kachel – CFO, Principal & CTO
    • James T. Vogt – Senior Portfolio Manager
    • Chad M. Imgrund – Sr. Research Analyst
    • Christopher E. Gildea – Sr. Portfolio Mgr.
    • Daniel P. Rodan – Sr. Portfolio Mgr.
  • Wealth Management
  • Our Process
    • Financial Planning
    • Process: Equities
    • Process – Fixed Income
  • Client Service
  • News
    • News & Resources
    • Market Commentary
  • Videos
    • Economic Updates
  • Contact
wealth management

November 17, 2021- It’s amazing how well corporations have navigated a minefield littered with disease, shortages, and rising inflation. The ability to pivot quickly is the hallmark of good leadership.

//  by Tower Bridge Advisors

Stocks continued to move higher yesterday. The Dow was aided by a strong performance by Home Depot# after it reported better than expected earnings.

Indeed, the theme this earnings season is the skill demonstrated by corporations in managing through a minefield created by Covid-19’s Delta variant, massive political uncertainty, supply chain disruptions, and sharply rising inflation. To be sure, not all companies navigated the rough seas successfully, but the vast majority did.

The word of the day, at least for today’s market letter, is pivot. When good managements see a road blocked ahead, they don’t just stand there and throw up their hands. They pivot. If they can’t get a particular part from a particular vendor, they pivot and look elsewhere. In some cases, they find their own sources, rent their own freighters, buy their own trucks. Last year, when hand sanitizer was short, Home Depot contracted with its paint supplier to shift a manufacturing line from paint to hand sanitizer. That solved its problem and allowed stores to stay open safely. Big names like Walmart and Costco hired their own freighters and avoided crowded ports like LA and Long Beach. Obviously, the little mom-and-pop store can’t do that. It’s the big corporate advantage, but it is only an advantage if a company takes advantage of its opportunity.

Managements pivot all the time. Daily. They do it quickly. But it isn’t just day to day things. When Satya Nadella replaced Steve Ballmer at Microsoft#, he immediately shifted the company away from Windows and PCs to enterprise solutions. In a world where Internet browsers were no longer operating system dependent, Windows’ importance was about to die. The location of every corporation’s computer was no longer a closet in the basement, but a remote data center. Soon the cloud obsoleted the data center. And guess who became one of the two major cloud providers in the world? Microsoft. Who was number one? Amazon, the Internet retailer that started selling books online.

Unfortunately, not all companies can pivot. Kodak was a photography company. But underneath the surface, it was a chemistry company coating specialty paper with a light sensitive coating. When digital photography arrived, all its advantages were gone. Not only that, it had no significant digital capability. It tried to build one from scratch but failed.

The New York Times has found a digital niche as the traditional newspaper industry crumbled. Advanced Micro Devices, a tertiary manufacturer of microprocessors, found other markets. Most often, it takes new management from outside to fully execute the pivot. Look at what’s going on at CVS# today. Not long ago, it was a traditional drug store chain. Then it decided to do more in the way of health services. It acquired Aetna, the big health insurance company. It set the table to remake itself. The process is ongoing. New leadership comes from within Aetna, not CVS. Not all pivots work, but companies in dying industries won’t survive without attempting to pivot.

IBM and Hewlett-Packard have pivoted multiple times, sometimes with more success than others, but both remain major factors in industries changing direction at lightening speed. Corning has made everything from kitchenware to Steuben glass to flat screens for TVs. It is one of the most active R&D companies in the world. It continues to evolve. Most likely, your Covid vaccine arrived in a Corning-made vial. Pivot.

The world never stands still. There are no original Dow Industrial members left. The last one to go, GE, is now in the process of reinventing itself as three companies. Pivot. Yes, there may be a few throwback stores that still appeal, but they are few and far between. One of the best 3-star restaurants in the world, 11 Madison Park in New York City, closed during the pandemic but has since reopened as a vegan restaurant. And yes, it still has 3 stars! The genes were there. It is reborn, vibrant.

No great company stands still. But not all successfully adapt. The young upstart with a better mousetrap often wins even if the resident leader recognizes the need to pivot. Bureaucracy and a stale mindset prevent fast movement. Look at Intel. Its length between cycles got longer as manufacturing became more complex. AMD and Nvidia passed it by. It has brought in new management from outside for the first time to try and catch up. Time will tell if it can or if it is too late. Verizon has hired a leader from outside. He’s trying. AT&T is trying to move forward with another insider. His deals for DirectTV and Time Warner were expensive misses. He is trying to pivot. But so far, all his moves have failed because he had no inherent advantage. In fact, in the cases of DirectTV and Warner, he started with major disadvantages. Sometimes you need to pivot more than once before succeeding.

All this takes me to Washington. President Biden has done his share of pivots over the last several weeks. At least he got the progressives to back off enough to get the long-delayed infrastructure bill passed. Speaker Pelosi is going to make yet one more attempt to get the Build Back America bill passed in the House. Depending on how the CBO scores the bill, she may get it done. But only if it scores in ways that keep down the cost and makes sure the vast list of new programs are properly paid for. We all know how games are played in Washington. No need to guess a political outcome. But if Ms. Pelosi can get House approval, the legislation will be changed significantly in the Senate. The key question is whether an ultimate Senate version can then be passed in the House. Said another way, will progressives accept half a loaf or no loaf at all?

Treasury Secretary Janet Yellen complicated things yesterday by saying that a debt ceiling extension was necessary by December 15th. That is about a month earlier than previously anticipated. Republicans are not going to vote for an extension as long as the Build Back America bill is on the table, and Democrats can only pass it alone under reconciliation. It’s hard to tell how hard the December 15th deadline is, but if it’s real, markets will take notice soon.

The last uncertainty to mention this morning is Biden’s choice to head the Federal Reserve beginning in February. The Senate must confirm the new head before the end of January. The choice is between current head Jerome Powell or Federal Reserve Board member Lael Brainard. Policywise, both are similar. I have no insight. But if Biden was going to make the safe choice, keeping Mr. Powell, logically he should have done it by now. Some suggest his choice will be announced at the end of this week or over the weekend. While both candidates have similar thoughts on monetary policy, Brainard represents change. And markets don’t like change, especially when they are content with the present. Biden continues to nominate key people in Washington who are anti-business. Brainard is a stronger advocate for more regulation on banking than Powell. Whoever the choice is, the market’s reaction won’t be major. Consensus still says Powell. But the longer we wait, the odds that it is Brainard increase, at least in my mind.

Today, Danny DeVito is 77. Martin Scorsese turns 79.

James M. Meyer, CFA 610-260-2220

Additional information is available upon request.

# – This security is owned by the author of this report or accounts under his management at Tower Bridge Advisors.

Additional information on companies in this report is available on request. This report is not a complete analysis of every material fact representing company, industry or security mentioned herein. This firm or its officers, stockholders, employees and clients, in the normal course of business, may have or acquire a position including options, if any, in the securities mentioned. This communication shall not be deemed to constitute an offer, or solicitation on our part with respect to the sale or purchase of any securities. The information above has been obtained from sources believed reliable, but is not necessarily complete and is not guaranteed. This report is prepared for general information only. It does not have regard to the specific investment objectives, financial situation or the particular needs of any specific person who may receive this report. Investors should seek financial advice regarding the appropriateness of investing in any securities or investment strategies discussed in this report and should understand that statements regarding future prospects may not be realized. Opinions are subject to change without notice.

Filed Under: Market Commentary

Next Post: November 22, 2021 – Record highs in the stock market masked an overall deterioration as slowing growth and rising costs impact more companies. While some of the pressures may be peaking or have already peaked, the clear sailing witnessed last spring is unlikely to return. »

Primary Sidebar

Market Commentary

Sign Me Up!

Latest News

  • June 24, 2022 – The battle to tame inflation has likely hit its apex as market fears now shift to whether a recession is coming and how strong it will be. Stocks and bonds price in what is a base case for 9-12 months from now. With interest rates collapsing, oil finally coming down, and many commodity prices getting crushed, one has to wonder if we still have a lot more negative economic news coming and how bad a recession might become.
  • June 22, 2022 – Yesterday’s relief rally looks to be another bear market one-day wonder. Any enduring rally needs to align with better economic news or signs that inflation is slowing. Oil prices seem to be stabilizing around the $110 per barrel range and other commodities have given back some ground lately. Those changes haven’t flowed through to retail prices yet, but they should. When signs are clearer there is room for stocks to rally.
  • June 17, 2022 – Fed officials gave what the markets priced in just 48 hours earlier, a 75bps increase in Fed Funds. This pull-forward of rate hikes comes in response to a robust job market and inflationary reports showing no slowdown in the economy or pricing. The fear now is that central banks only have one way to stop inflation, force a recession.
  • June 15, 2022 – For months the Fed has been behind the curve when it comes to fighting inflation. As investors we have all paid the price. Today’s FOMC meeting gives it one more chance to be forceful, to roll out the heavy artillery. A 75-basis point rate increase is expected, but the real story will emanate from Jerome Powell’s post-FOMC press conference. There are already early signs of a slowing economy. The Fed simply has to convince investors that it will do whatever is needed to defeat inflation. It has talked the talk before. Investors want more details. If he can convince investors he has the right strategy and enough tools, markets can stabilize.
  • June 13, 2022 – Friday’s report on Consumer Prices told us all that the fight against inflation will be harder than previously anticipated. This week, the Fed will increase interest rates again. It may suggest the ultimate Fed Funds rate this cycle will need to be higher than previously thought. None of this is good news for equity investors.
  • June 10, 2022 – CPI headlines should dominate trading action today. Markets have been trading in a tight, slightly negative range after an oversold bounce brought major averages up ~10% over the prior few weeks. Investors hope that today’s report offers positive glimpses at what we should expect over the slower summer months with respect to lower inflation.
  • June 8, 2022 – We are in that quiet zone between earnings seasons with little important economic news. Stocks move up one day and down the next. While Friday’s CPI report and next week’s FOMC meeting will be highlights, the collective outcome of second quarter earnings reports to be announced a month from now will be key to the market’s direction over the summer. Risks remain elevated.
  • June 6, 2022 – Last week stocks fluctuated in a seesaw pattern with a slight downward bias after the spectacular recovery two weeks ago. Obviously, a 6% weekly move can’t be sustained for long. It was encouraging to see markets act as well as they did in the face of uneven corporate and economic news.
  • June 3, 2022 – A confusing “hurricane” update from Jamie Dimon of JP Morgan#. A lowered earnings projection from Microsoft#. Profit headwinds for Salesforce relative to expectations. Lackluster jobs report from ADP on private payrolls. An unexpected departure from Facebook’s# C-Suite. 10-year Treasury rates jumping 20bps back towards 3%. A lot of negative headlines, but stocks are holding their own…so far.
  • June 1, 2022 – Stocks lost a bit of ground yesterday after a sterling week that essentially erased all of May’s losses. At yesterday’s close both the Dow Jones Industrials and the S&P 500 finished virtually unchanged for May, after last week’s gains of about 6% wiped out losses for the month. For the year-to-date, however, all three major averages remain solidly in correction territory, with the NASDAQ still in the midst of its own bear market, down well over 20%.

Footer

Wealth Management Services

  • Individuals & Families
  • Financial Advisors
  • Institutions & Consultants
  • Medical & Dental Professionals

Important Links

  • ADV II & CRS
  • Privacy Policy

Tower Bridge Advisors, a Philadelphia Wealth and Asset Management firm, is registered with the SEC as a Registered Investment Advisor.

Portfolio Review

Is your portfolio constructed to meet your current and future needs? Contact us today to set up a complimentary portfolio review, using our sophisticated portfolio analysis system.

Contact

Copyright © 2021 Tower Bridge Advisors
Philadelphia Wealth & Asset Management, Registered Investment Advisors

101 West Elm Street, Suite 355
Conshohocken, PA 19428
Phone: 610.260.2200
Toll Free: 866.959.2200

  • Why Tower Bridge Advisors?
  • Investment Services
  • Our Team
  • Wealth Management
  • Investment Process
  • Client Service
  • News
  • Market Commentary
  • Economic Update Videos
  • Contact