After a year's hiatus with the coronavirus pandemic, median household income began noticeably rising in May 2021. But median new home sale prices are continued rising faster. The following chart shows the newly developing trend in the relationship between median new home sale prices and median household income.

Let's recap the recent history. After a short spike to reach a record 5.45 times (5.45X) median household income in February 2018, the relative level of affordability of new homes in the U.S. improved after that point, bottoming at 4.88X in May 2020. A surge of demand after May 2020 has fueled inflating new home prices, which have risen to 5.38X median household income as of July 2021.

Which is to say that new homes are becoming less affordable for the typical American household. The following chart shows the current declining trend for affordability:

We'll report our estimate for median household income for July 2021 on 1 September 2021.

This edition of the S&P 500 chaos series won't be a surprise at all. On Friday, 27 August 2021 the Fed's minions went all out to set the expectations that the Fed will start slowing down and tapering its stimulus bond buys in the fourth quarter of 2021. Not uncoincidentally, the dividend futures-based model says investors are mostly fixing their forward looking focus on 2021-Q4, so mission accomplished for the minions.

Looking forward, we see the dividend futures-based model is about to enter another period where the volatility of past stock prices affects its projections of the future. We've updated the redzone forecast we've been showing in the 2021-Q3 chart since we first introduced it at the beginning of the quarter, which assumes investors will remain focused on 2021-Q4 from now until most of the way through the fourth quarter of 2021.

That's pretty much the week's news in a nutshell with respect to moving the markets. Here's the rest, where if you're not familiar with how little most political events affect stock prices, you might be surprised to see how little President Biden's fiasco in Afghanistan is affecting the market, which is paying much closer attention to what the Fed is planning to do.

Monday, 23 August 2021

• Signs and portents for the U.S. economy:
• Delta variant, having put kibosh on Fed event, begins to menace recovery
• Oil jumps 5% after 7 days of losses, boosted by weaker dollar
• Delta variant, supply woes crimp business activity in August -IHS Markit survey
• Chief Fed minion gets Treasury endorsement for re-upping in job:
• Yellen backs reappointing Powell as Fed chair - Bloomberg
• Global economy recovering to pre-pandemic level, still being dictated by COVID waves:
• Global dividends to near pre-pandemic levels in 2021 -report
• Japan's private-sector activity hit by COVID-19 surge - PMI
• France's Le Maire: French economy "doing well", hoping for pre-COVID growth levels by end 2021
• UK growth slows to six-month low as post-lockdown shortages bite -PMI
• UK factories report worst shortage of stocks on record - CBI
• Euro zone business boom roared on in August -PMI
• Bigger inflation developing all over:
• Singapore July inflation surpasses pre-pandemic levels
• Wall St gains, Nasdaq notches record closing high on full vaccine approval

Tuesday, 24 August 2021

• Signs and portents for the U.S. economy:
• U.S. new home sales creep up; supply, prices remain constraints
• Oil settles up 3%, boosted by Mexican oil rig outage, U.S. vaccine approval
• Bigger trouble developing in Asia:
• Delta blow knocks wind out of Asia's economic recovery
• Two-thirds of Japan's smaller firms' sales still below pre-COVID level -survey
• ECB minions want to regulate more:
• Shadow banks need tighter regulation, ECB's Schnabel says
• Wall St extends rally, pushing S&P 500 to 50th all-time high close this year

Wednesday, 25 August 2021

• Signs and portents for the U.S. economy:
• Oil extends rally, rises over 1% on U.S. fuel demand recovery
• U.S. mortgage applications rise as mortgage rates edge down -MBA
• Fed minions conflicted by only two tasks they have:
• Analysis-Inflation vs jobs hole: A tradeoff the Fed still hopes to skirt
• Bigger trouble developing in China, Germany; Bigger stimulus developing in China:
• BOJ policymaker warns of global impact from chip crunch, Asia factory closures
• German exports to China fall for first time in nearly a year
• German business morale falls on rising COVID cases, bottlenecks
• China central bank increases cash injections to soothe tightening worries
• ECB minion says Eurozone economy looking better than expected:
• ECB's de Guindos says ECB could revise upwards economic projections
• S&P 500, Nasdaq notch all-time closing highs ahead of Jackson Hole

Thursday, 26 August 2021

• Signs and portents for the U.S. economy:
• U.S. August auto sales to fall as supply constraints continue - J.D. Power, LMC Automotive
• U.S. corporate profits soar in second quarter; economic growth raised
• Oil rally falters on pandemic surge, renewed Mexico supply
• Fed minions getting on board with slowing and stopping stimulus bond buys sooner:
• Fed hawks circle before Powell speech as they push for bond taper
• Fed's George: Taper should come 'sooner rather than later'
• Fed's Kaplan: U.S. economy still on track for tapering in October or "shortly thereafter"
• "Fed Should Get Going" - Stocks Stumble As Fed's Bullard Says Taper Should Be Over By Q1 2022
• Fed's Powell likely to give few hints on bond-buying taper timeline
• COVID: Bigger trouble developing in Japan, bigger stimulus developing in China:
• Japan keeps economic view intact, bleaker on outlook due to COVID
• China urges financial support for retail, catering, trading firms
• Other central bank minions moving to hike rates:
• S. Korea lifts interest rates from record low as debt threats grow
• Wall Street loses ground, snapping rally on Afghanistan, Fed concerns

Friday, 27 August 2021

• Signs and portents for the U.S. economy:
• Automobiles restrain U.S. consumer spending, monthly inflation slowing
• U.S. consumer sentiment plummets to near-decade low
• Runaway U.S. home price rises to slow, but affordability to worsen: Reuters poll
• Fed minions indicate tapering of stimulus bond buys to begin in 2021-Q4:
• Fed's Powell holds fast to 'this year' timeline for bond-buying taper
• Why Fed's Powell still thinks high inflation is 'temporary'
• It's time to pivot from fiscal support, researchers tell Fed conference
• Fed's Kaplan says labor shortages may persist
• Fed's Mester says taper should begin this year, end middle of next
• Fed's Harker says he still supports tapering sooner rather than later
• Exclusive-Fed's Bostic says 'reasonable' to begin bond-buying taper in October
• Bigger trouble developing in Japan, Australia:
• Japan's July factory output to fall as Delta variant spreads in Asia: Reuters poll
• Australia retail sales plunge in July, economy set to shrink
• S&P 500, Nasdaq nab all-time closing highs as Powell soothes taper fears

Over the last couple of months, we've been featuring our favorite sources of market data and news at the end of the weekly editions of the S&P 500 chaos series. Obviously, there are a lot more than what we've featured, so if you're reading this article on a site that RSS news feed and allows comments, please point to your favorites - we're always on the hunt for high quality news and data sites!

Not long ago, Markets in Everything, a running feature at Marginal Revolution, featured a bag designed to "comfortably" carry $1 million in "used" U.S. $100 banknotes, SDR Traveler's 1M Hauly. But MIE discovered two bits of bad news. First, it costs $220, and second, it is sold out at this writing!

The Inventions in Everything team was excited because this is a class of invention that we haven't covered previously, so we searched for patents related to the technology you would think would be incorporated into a bag designed to hold one million dollars. Specifically, we sought out an invention that would incorporate the one thing we think someone walking around with one million dollars in a bag would want: anti-theft security features.

That led us to U.S. Patent 9,161,596, for a Security Luggage Bag, which was patented by Robert Wesley Schlipper of Hong Kong on 20 October 2015.

What makes this invention special is that it incorporates a reinforcing wire mesh layer within a soft-sided fabric material that makes it both light weight and exceptionally difficult to cut open. Here's a figure from the patent illustrating how the mesh might be incorporated in all sides of a luggage bag.

With that technology in mind, we set out to search for an alternate product for comfortably and securely carrying that $1 million worth of $100 bills about that is currently available in the marketplace.

We first needed to figure out the minimum specifications we needed to shop for. A $100 bill measures 6.14 inches by 2.61 inches by 0.0043 inches and weighs 1 gram. $1 million worth of these bills would stack up to 43 inches in height and weigh 10 kilograms (a little over 22 pounds). In terms of volume for the banknotes, that's a little under 0.4 cubic feet or roughly 11.3 liters.

Having set that minimum, the IIE team found a product that can do the job of the unavailable $220 Hauly a lot more comfortably, securely, and inexpensively: Pacsafe's Metrosafe LS350 Anti-Theft 15L Backpack, which is available on Pacsafe's site for $119.95 and at Amazon for $99.95.

Pacsafe does make larger versions of the backpack, but we picked this one out because it appears to meet the basic requirements for comfortably and securely carrying $1 million in used $100 bills. Sandra Olsen at Backpacking Blueprint has a review of the backpack and its features.

While it does offer a pocket featuring RFID-blocking technology to hold small items like mobile phones and credit cards, the backpack doesn't provide the same option for the main compartment. Since many would consider that feature to be essential in the modern age, Faraday Defense's 17L EMP Waterproof Backpack might work as an alternate option. At a cost of $124.99 at Amazon, it costs more, but doesn't offer the anti-theft security features of Pacsafe's backpack. We think the ideal anti-theft security backpack would incorporate both technologies, but we found no products that did in our limited search.

Even the 1M Hauly bag doesn't incorporate RFID-blocking capability, yet at least SDR Traveler recognizes the need for such a product. Its Heist Shielding Pouch can add that capability to its 1M Hauly bag, at an additional cost of $440. Alas, it too is currently unavailable at this writing.

It does occur to us that the hardest part for developing an effective product in this category of innovation is getting the $1 million worth of $100 bills to properly conduct the necessary prototyping and field testing.

When we talk about Campbell's Tomato Soup, we often refer to it as a product that hasn't much changed since it was first introduced to American consumers in 1897. But like the metaphorical Ship of Theseus, just about every aspect of the iconic product has been changed over the decades the product has existed. The recipe. The tomatoes. The can. The can's lining.

And also its iconic label, which has just been in the news because its basic design is being changed for the first time in 50 years. Campbell Soup (NYSE: CPB) posted the video announcement of the change on Twitter:

The company described the changes to its label in a press release:

Maintaining the famed red and white color blocking loved by generations, the redesigned Campbell’s label features several new elements to contemporize the brand while respecting its heritage — including a modernized logo scripture, which was based on founder Joseph Campbell’s original signature. Campbell’s fans will be able to spot more hidden elements, including the Campbell’s ‘C’ in the fleur de lis and slanted ‘O’ in soup that pays tribute to the letters from the first red and white label in 1898.

“We’ve been on a journey to reimagine this iconic brand and appeal to new generations of consumers who are cooking at home more than ever, while still honoring our rich history,” says Linda Lee, Chief Marketing Officer, Meals & Beverages, Campbell Soup Company.

What Lee doesn't mention is the 2021 changes in the label will help Campbell Soup save money on printing labels, reducing the complexity of the printing process it has been using during the past five decades. It's a seemingly small change that when multiplied by millions of cans produced per year, will produce significant savings, partially offsetting the inflation in other production and transportation costs Campbell Soup is coping with in 2021.

But only partially, since those other rising costs are larger. What the change means is that the price for consumers will rise more slowly than it otherwise would have had Campbell's not adapted the design of its labels.

Speaking of producing millions of cans of soup per year, we'll close with a 2019 video of Campbell Soup's labelling and palletizing line #3 at its Toronto facility in action.

Producing soup has changed too. At the time the video was posted, Campbell Soup was seeking to sell the featured production equipment.

Based on the latest estimates, the market cap for the new home market in the U.S. began to rebound in June 2021 and continued to rise in July 2021. The proof for that bold claim can be seen in the first chart below, which shows the trailing year average historic and inflation adjusted market capitalization for new homes sold in the United States from January 1976 through July 2021.

After bottoming at a nominal $28.92 billion in May 2021, the market cap for new homes sold in the U.S. has risen to an initial estimate of $30.12 billion in July 2021. For the data shown in the chart, it takes roughly 6-10 months for the data to become finalized after the initial estimate, so these figures are subject to change, but overall, the estimate will capture the trend.

That's the good news. The bad news lies in what's behind the rebound for the U.S.' new home market cap....

Market capitalization is the product of the average sale price of new homes and the number of sales. The following chart shows the annualized trailing year average number of new home sales recorded in the U.S. from January 1976 through July 2021.

As you can see, the number of new home sales peaked in November 2020. The number of new homes sold each month since has been in a downtrend, including for the latest month of July 2021.

But the market cap of new homes sold in the U.S. has risen during the last two months. The only way that math works is if the average sale prices of new homes is rising faster than the number of sales is falling. In other words, new home sale prices are inflating faster than sales are being made.

That's not surprising, given how things have generally played out in the U.S. economy in 2021. But it does suggest that the new homes portion of the real economy of the U.S. is shrinking.

As we noted earlier, the data we're reporting today will be subject to revision for some time to come, so the final picture may look different than it does today. The real question is how different.

References

U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 24 August 2021. 

U.S. Department of Labor Bureau of Labor Statistics. Consumer Price Index, All Urban Consumers - (CPI-U), U.S. City Average, All Items, 1982-84=100[Online Application]. Accessed 11 August 2021. 

This is the third and final snapshot in time we're presenting for the S&P 500 (Index: SPX) in the summer of 2021, this time focusing on the expectations for future quarterly dividends.

The following chart documents past quarterly dividend futures for the S&P 500 from 2020-Q3 through 2021-Q2 and shows the projected expectations for the index' future dividends per share from 2021-Q3 through 2022-Q3:

Sharp eyed readers will note that dividend futures do not follow calendar quarters, which makes them different from the figures reported by Standard and Poor for the index. Instead, they follow the terms of dividend futures contracts, which run from the end of the third Friday of the month ending the preceding quarter through the third Friday of the month ending the indicated quarter.

Reference

CME Group. S&P 500 Quarterly Dividend Index Futures. [Online Database]. Accessed 20 August 2021.

The S&P 500 (Index: SPX) closed at a new record high of 4,472.94 on Monday, 16 August 2021, retreated on Tuesday and Wednesday, then rebounded somewhat to close at 4,441.67 on Friday, 20 August 2021.

All in all, that puts the level of the S&P 500 just a bit below where the dividend futures-based model would set it for investors focusing on either 2021-Q4 or 2022-Q1 in setting current day stock prices.

We're emphasizing both these future quarter because the stock market underwent something akin to a minor Lévy flight event, which occurred as investors shifted at least a portion of their forward-looking focus inward from 2022-Q1 toward 2021-Q4. That shift was prompted by changing expectations for when the Federal Reserve might start tapering its stimulus bond buys. But it wasn't a major shift because there's not much difference between the expectations for changes in the growth rate of dividends for these upcoming future quarters, which is why stock prices did not change more than they did.

Looking ahead, the Federal Reserve's annual summer Jackson Hole meetings will take place (virtually) in this upcoming week. New information coming out from that event may have a larger impact on stock prices, particularly as it might provide a more firm expecation of when the Fed will start following through on its desire to start tapering its pandemic stimulus policies.

But when looking backward to the past week, there wasn't much market moving news for investors to use to set their outlooks for the months ahead. The headlines below attest to the relative quiet ahead of the Fed's Jackson Hole meetings.

Monday, 16 August 2021

• Signs and portents for the U.S. economy:
• N.Y. Fed's factory gauge softens on slower shipments, order growth
• Oil pares loses as OPEC+ sees no need for more supply hikes
• Former Fed minions think higher inflation = more jobs:
• Higher inflation target could trigger jobs boom, former Fed staffers say
• Bigger trouble, stimulus developing in China:
• China economy under pressure as factory output, retail sales growth slow sharply
• China to strengthen macro policies to support employment - state media
• BOE minions put rate hike on hold until 2023:
• Bank of England to wait until 2023 before raising rates: Reuters poll
• S&P 500, Dow hit record highs as defensive shares shine
• Investors step back from risk amid worries over China data, Afghanistan

Tuesday, 17 August 2021

• Signs and portents for the U.S. economy:
• Delta, beef prices threaten to take the sizzle out of U.S. steakhouses
• U.S. manufacturing production accelerates on autos in July
• Automobile shortages weigh on U.S. retail sales
• U.S. business inventories rise solidly in June
• U.S. homebuilder confidence falls to 13-month low in August
• Automobile shortages, spending shift to services tank U.S. retail sales
• Dovish Fed minion looks for slow stimulus bond buys in 2021-Q4 or 2022-Q1, chief minion not impressed by Delta COVID strain:
• Fed's Kashkari: 'Reasonable' to taper late this year or early next
• Fed's Powell: Not certain Delta outbreak will dent recovery
• Eurozone saw net positive economic growth in 2021-Q2:
• Euro zone growth confirmed at 2% in Q2, employment rises
• Wall Street slumps after weak retail sales, Home Depot results

Wednesday, 18 August 2021

• Signs and portents for the U.S. economy:
• U.S. mortgage applications drop as mortgage rates edge above 3% -MBA
• U.S. homebuilding stumbles amid unrelenting supply constraints
• U.S. employment growth through March revised modestly lower
• Oil skids for fifth day on COVID surge, worries about more supply
• Most Fed minions want to start slowing stimulus bond buys before end of 2021, one fears getting inflation wrong:
• Minutes reveal a Fed split over job market, bond-buying taper
• FOMC Minutes Show "Most" Fed Members See Taper Starting This Year
• Bullard: Misreading inflation could require "very disruptive" rate hikes - MarketWatch
• Wall Street slides after Fed minutes show split over jobs, taper

Thursday, 19 August 2021

• Signs and portents for the U.S. economy:
• U.S. second-quarter growth likely to be revised higher after slew of strong data
• U.S. weekly jobless claims hit 17-month low; ranks of unemployed shrinking
• U.S. lets states use federal pandemic funds to extend jobless aid
• Philly Fed factory index falls in July to lowest since December
• Bigger inflation developing all over:
• Australia's red-hot housing to get hotter, affordability to worsen - Reuters poll
• New Zealand house price 'madness' to leave affordability stretched for years: Reuters poll
• S&P 500 ends with slim gain as tech strength offsets cyclical woes

Friday, 20 August 2021

• Signs and portents for the U.S. economy:
• Oil posts biggest week of losses in nine months as Delta variant spreads
• Fed minions paying attention to COVID trends, getting set for annual shindig in Jackson Hole:
• Fed's Kaplan watching Delta variant, says he may need to adjust view
• Take Five: The Jackson Hole Jamboree
• Bigger trouble developing in China:
• Half a trillion dollars wiped from China markets in a week as clampdowns shatter confidence
• Wall Street rallies as Fed jitters wane, but ends down for the week
• S&P 500 ends with slim gain as tech strength offsets cyclical woes

If you're looking for an RSS newsfeed featuring news affecting the stocks of multiple individual companies almost as soon as it hits the wires, you might check out Seeking Alpha's Market Currents.

Marcus du Sautoy has a very real talent for popularizing maths. His 10 episode 2010 BBC series A Brief History of Mathematics has become one of our favorite podcasts on any topic. It's a fantastic introduction to the breadth of mathematical developments that led to advancements in science.

Now, he has a new book out, Thinking Better: The Art of the Shortcut, which is already available in the U.K. and will be available in the U.S. from 19 October 2021, in which he explores maths as a human invention aimed at avoiding "huge slogs of hard work"!

The following 20 minute Numberphile video features him discussing the role of shortcuts in solving challenging problems more easily, but also the risks that may lie in cutting out too much information:

Some of the most tantalizing developments in maths today is oriented toward determining if shortcuts exist. It's the stuff the Clay Mathematics Institute's Millennium Prize Problems are made of!

When we last checked in on Arizona's experience during the coronavirus pandemic, back on 15 July 2021, the number of cases in the state had begun to rise in a slow uptrend. Flashing forward in time to a month later, we find that Arizona is now experiencing much more rapid rise, having entered a third wave of coronavirus infections.

In the following chart, we've aligned the rolling seven-day averages for the number of COVID cases, new hospital admissions, and deaths to the approximate date of exposure for the Arizonans affected by the spread of the various strains of the SARS-CoV-2 coronavirus. The chart is presented in linear scale, where you can see the third wave of infections begin to accelerate at the end of June 2021, which coincides with the Phoenix Suns advancing to the finals in the NBA playoffs.

The chart only visualizes where the available data for each date is at least 95% complete, where it takes slightly longer to reach that level of completeness for hospitalizations and longer still for deaths attributed to COVID-19 to be recorded. Since these data series are difficult to see in this first chart, here is the same data presented with the vertical scale shown in logarithmic scale.

This chart has quickly become our favorite way to visualize this data, because with the data for each series indexed to the approximate date of initial exposure to coronavirus infection, we can easily see the data for each series has generally paralleled each other in the previous waves.

That characteristic is significant here because we can directly see the impact the COVID vaccines have had in reducing the rate of hospitalizations, which are rising much more slowly than would be predicted by the rate of cases. You can see that difference by comparing the dashed blue line which parallels the current trend for cases with the solid green line indicating COVID hospitalizations.

The data series for deaths is still too incomplete for Arizona's third COVID wave to confirm that pattern exists with this data as well, but it would be reasonable to predict it will show a similar pattern as hospitalizations.

Arizona ICU Bed Usage

Arizona's data for ICU bed usage for COVID indicates Arizona's hospitals have begun adapting to the rising number of serious COVID hospitalizations. Hospitals in the state began actively managing their ICUs to make more beds available for COVID patients beginning after the 4 July 2021 holiday, with a notable adjustment in the number of beds set aside for non-COVID patients roughly two weeks later. One month later, the Arizona hospitals added new ICU capacity. These changes are visible in the following chart:

Compared to the earlier COVID waves, Arizona hospitals are seeking to accommodate higher numbers of non-COVID patients in ICUs. While that may change, that is an initial indication they see less risk of overwhelming ICUs with COVID patients during Arizona's third wave of coronavirus infections.

Previously on Political Calculations

Here is our previous coverage of Arizona's experience with the coronavirus pandemic, presented in reverse chronological order.

• Arizona COVID Cases on Slow Uptrend in Summer 2021
• Increase in Arizona COVID Cases from Border Migration Crisis Stabilizing
• COVID-19 and the 2021 Border Migration Crisis in Arizona
• Improving COVID Trends Bottom and Flatline in Arizona
• Surge of Migrants, Lifting of Business Capacity Limits Change Arizona COVID Trends
• COVID-19 in Retreat in Arizona With Vaccines Gaining Traction
• The Ebb and Flow of COVID-19 in Arizona's ICUs
• Arizona's Plunging COVID-19 Caseloads and the Vaccines
• Arizona Enters Downward Trend for COVID-19 After Second Peak
• Arizona Passes Second COVID-19 Peak
• A Tale of Two States and the Coronavirus
• COVID-19 Questions, Answers, and Lessons Learned from Arizona
• The Deadly Intersection of Anti-Police Protests and COVID-19
• 2020 Campaign Events Drive Surge in Arizona COVID Cases
• Arizona Arrives at Critical Junction for Coronavirus Cases
• Arizona To Soon Reach A Critical Junction For COVID-19
• Getting More Than Care from Arizona's COVID ICU Beds
• Arizona's Decentralized Approach to Beating COVID
• Going Back to School with COVID-19
• Arizona Turns Second Corner Toward Crushing Coronavirus
• Arizona's Coronavirus Crest in Rear View Mirror
• The Coronavirus Turns a Corner in Arizona
• A Delayed First Wave Crests in the U.S. and a Second COVID-19 Wave Arrives
• The Coronavirus in Arizona
• A Closer Look at COVID-19 Deaths in Arizona
• The New Epicenter of COVID-19 in the U.S.
• How Long Does a Serious COVID Infection Typically Last?
• How Deadly is the COVID-19 Coronavirus?
• Governor Cuomo and the Coronavirus Models
• How Do False Test Outcomes Affect Estimates of the True Incidence of Coronavirus Infections?
• How Fast Could China's Coronavirus Spread?

References

We've continued following Arizona's experience during the coronavirus pandemic because the state's Department of Health Services makes detailed, high quality time series data available, which makes it easy to apply the back calculation method to identify the timing and events that caused changes in the state's COVID-19 trends. This section links that that resource and many of the others we've found useful throughout the coronavirus pandemic.

Arizona Department of Health Services. COVID-19 Data Dashboard: Vaccine Administration. [Online Database]. Accessed 17 August 2021.

Stephen A. Lauer, Kyra H. Grantz, Qifang Bi, Forrest K. Jones, Qulu Zheng, Hannah R. Meredith, Andrew S. Azman, Nicholas G. Reich, Justin Lessler. The Incubation Period of Coronavirus Disease 2019 (COVID-19) From Publicly Reported Confirmed Cases: Estimation and Application. Annals of Internal Medicine, 5 May 2020. https://doi.org/10.7326/M20-0504.

U.S. Centers for Disease Control and Prevention. COVID-19 Pandemic Planning Scenarios. [PDF Document]. 10 September 2020.

More or Less: Behind the Stats. Ethnic minority deaths, climate change and lockdown. Interview with Kit Yates discussing back calculation. BBC Radio 4. [Podcast: 8:18 to 14:07]. 29 April 2020.

It's a good week for S&P 500 (Index: SPX) snapshots, where we're focusing on the index' market capitalization in this update.

But not just of the index as a whole. We've also identified the Top 10 firms making up the 505 stocks that make up the current composition of the S&P 500, where we find they collectively account for 27.8% of the index' entire market capitalization of $37.15 trillion.

The other 495 firms in the S&P 500 have a collective market capitalization of $26.8 trillion. That figure, coincidentally, was the entire market capitalization of all the companies of the S&P 500 back on 31 July 2020!

Here's the list of the top 10 components of the S&P 500 index:

• Apple (NASDAQ: AAPL)
• Microsoft (NASDAQ: MSFT)
• Amazon (NASDAQ: AMZN)
• Facebook (NASDAQ: FB)
• Alphabet (A) (NASDAQ: GOOGL)
• Alphabet (C) (NASDAQ: GOOG)
• Tesla (NASDAQ: TSLA)
• Berkshire Hathaway (B) (NYSE: BRK.B)
• Nvidia (NASDAQ: NVDA)
• JP Morgan Chase (NYSE: JPM)

The top two firms, Apple and Microsoft, have market caps in excess of $2 trillion each. Amazon, which ranks third, has a market cap of nearly $1.4 trillion. If we combine the market cap for the two classes of Alphabet stocks, the firm formerly known as Google would have a market cap in excess of $1.5 trillion. Separately, both Alphabet stocks fall below Facebook, which ranks fourth among the individual stock listings, having a market cap in excess of $854 billion.

Dropping down the list, Tesla has surged into the Top 10 of the S&P 500's components since our last snapshot from August 2020. Nvidia also joins the list in this edition.

Meanwhile Berkshire Hathaway carries over, but Johnson & Johnson has dropped out of the top ten, replaced by JP Morgan Chase.

References

Slickcharts. S&P 500 Companies by Weight. [Online Database]. Accessed 15 August 2021.

Ycharts. S&P 500 Market Cap. [Online Database]. 31 July 2020. Accessed 15 August 2021.

Every three months, we take a snapshot of the expectations for future earnings in the S&P 500 (Index: SPX) at approximately the midpoint of the current quarter, shortly after most U.S. firms have announced their previous quarter's earnings.

The biggest change since our last update three months ago is that Standard and Poor's latest forecast is projecting stronger earnings growth.

The more robust earnings growth can best be seen in the trailing year earnings per share projected for December 2021. Three months ago, S&P anticipated that figure would be $174.87 per share (shown in green), which is now expected to reach $186.09 per share (red).

If that outcome is realized, it would put the S&P 500's trailing twelve month earnings per share ahead of the trajectory that S&P projected back in February 2020 (orange), before the onset of the coronavirus pandemic recession hammered corporate earnings in the U.S.

Reference

Silverblatt, Howard. Standard & Poor. S&P 500 Earnings and Estimates. [Excel Spreadsheet]. 12 August 2021. Accessed 12 August 2021.

You would think more people would be excited by the prospects of the S&P 500 (Index: SPX) setting new highs on almost every day of the week. But we're in the summer doldrums, with investors waiting to see what news might emerge from the meetings of the Federal Reserve's minions later this month at Jackson Hole, Wyoming that might reshape their expectations for the future.

Still, seeing the S&P 500 drift higher is not a bad consolation prize to have to deal with while waiting to find out how the Fed might change its monetary policies.

In terms of the dividend futures-based model's projections, we've entered a very short term echo where the model's projections will be off for about a week. In the absence of news changing the outlook for investors, we should see the actual trajectory of the S&P 500 continue trending slowly upward to rejoin with the trajectory associated with investors focusing on 2022-Q1 in about a week.

This is one of those circumstances for which we could generate a redzone forecast, but which we won't because it'll be over soon enough to not make the exercise worthwhile. We'll have a bigger echo event to deal with several weeks from now, where we'll refine what we're currently showing in the chart as we get closer to it.

In the meantime, here's the major market moving news of the trading week ending on Friday, 13 August 2021.

Monday, 9 August 2021

• Signs and portents for the U.S. economy:
• U.S. consumers' near-term inflation expectations remain high, New York Fed
• U.S. job openings surge to new record high, hiring increases
• Oil slides to 3-week low on China's virus curbs, strong dollar
• Fed minions split on keeping stimulus bond buys going, okay with higher inflation:
• Fed officials say tapering is near, advancing discussion on rate hike
• Fed's Bostic: U.S. needs to be "beyond the crisis" before rate hike
• Fed's Barkin: Inflation likely to remain at Fed's 2% target
• Bigger trouble, stimulus developing in China:
• Wall Street investment banks cut China growth forecasts
• China central bank to keep monetary policy 'flexible and appropriate'
• Bigger inflation developing all over:
• https://www.reuters.com/article/us-china-economy-inflation/chinas-july-factory-price-growth-quickens-adds-to-business-and-broad-economic-pressures-idUSKBN2FA03E
• S&P dips, just off record as energy shares fall

Tuesday, 10 August 2021

• Signs and portents for the U.S. economy:
• U.S. small business optimism drops as labor shortages persist
• U.S. productivity growth slows in Q2; labor costs revised down in Q1
• Oil up more than 2%, boosted by forecast for U.S. fuel demand growth
• Fed minion really wants to keep stimulus bond buys going:
• Fed's Evans: Wants 'few more' job reports before bond taper
• ECB minions side hustle not going well:
• Euro zone banks left flying solo by new glitch in ECB payment system
• Dow, S&P 500 close at records as U.S. infrastructure bill clears Senate

Wednesday, 11 August 2021

• Signs and portents for the U.S. economy:
• U.S. mortgage applications rise as rates remain below 3% -MBA
• U.S. consumer price increases slow in July, signs inflation peaked
• Crude futures settle higher and add gains on U.S. policy
• Fed minions boost liquidity support, say government response to COVID did harm, indicate they will start paying attention to inflation, and want to stop stimulus bond buys as early as in 2021-Q4:
• NY Fed's Logan says new repo facilities should boost confidence in money markets
• Fed's Bostic says the pandemic widened economic disparities
• Fed's George says policymakers need to watch inflation expectations
• Fed officials grapple over timeline for tapering asset purchases
• Fed's Kaplan says central bank should start tapering in October
• Fed's Barkin: U.S. "closing in" on taper, but could still take a few months
• Slowing inflation growth lifts Dow, S&P to records

Thursday, 12 August 2021

• Signs and portents for the U.S. economy:
• Oil prices slip as IEA warns of slowdown in demand recovery
• Spread of COVID-19 Delta variant knocks oil demand outlook -IEA
• U.S. producer prices at more than decade high; jobless claims fall
• Inflation expectations driving expectations for Fed policy changes:
• Marketmind: Peak inflation?
• Analysis-Investors renew focus on Fed following signs inflation may have peaked
• Fed framework gives rise to mash-up of views, averaging strategies
• Bigger trouble developing in China:
• Major container ports in eastern China see worsening congestion after COVID-19 cases
• ECB minions ideas for managing inflation not going over well:
• ECB's new inflation plan fails to win over German analysts, poll shows
• Stocks hit records; dollar, Treasury yields edge up as tapering debate dominates

Friday, 13 August 2021

• Signs and portents for the U.S. economy:
• U.S. consumer sentiment plummets in early August to decade low
• Oil dips, little changed on week despite weaker demand forecasts
• Expectations rise that Fed minions will soon start slowing stimulus bond buys:
• Reuters poll: Fed to unveil bond-buying taper plan next month; jobless rate to fall slowly
• Factbox-In their own words: Fed policymakers debate when to reduce stimulus
• Analysis-As Fed shifts gears, shaping consensus gets trickier for Powell
• Bigger trouble developing in Japan, analysts start predicting what countries will default on national debts before 2050:
• Japan's Q3 growth forecast slashed on COVID-19 surge: Reuters poll
• Debt in a warm climate: coronavirus and carbon set scene for default
• Dow, S&P close at records as Disney offsets drop in sentiment

We've been sharing the higher quality news sources we make use of in preparing each edition of our S&P 500 chaos series over the last several weeks. This week, we'll point you toward the CME Group's FedWatch Tool, which is a good way to see how futures traders are betting on how much and when the Federal Reserve will next change short term interest rates in the U.S. Click through the date tabs at the top to see how the expectations change at different FOMC meeting dates in the future... if you look today (16 August 2021), you'll find greater than 50% odds of a quarter point or larger rate hike by the end of 2022-Q4!

We've reached the dog days of summer, when the hot sun combines with thick humidity to make just being outside a miserable experience. It might be different if you were doing something fun, but no, you have grass to mow.

Meanwhile, your little one is over there, having fun, riding their tricycle. That's when a spark of genius arrives, unleashing the inspiration of innovation. What if you took their tricycle, attached a mower to the back of it, then made them mow the grass for you?

The Inventions in Everything team imagines something like that must have happened to lead to today's featured invention, the tricycle lawnmower. Or as it's properly identified in U.S. Patent No. 4,455,816, the Pedal Operated Mower. Here's Figure 1 from the patent - tell us what we just described is not how this invention was inspired!

The summary of the invention identifies physical fitness, injury avoidance, and environmental benefits, but does nothing to dispell our idea of how this invention came to be:

An object and advantage of the present invention is to provide a pedal operated mower that does not consume fuel or make noises corresponding to engines for mowers, but provides an arrangement that is conveniently an exercising assembly for operators, both young and old.

Another object and advantage of the present invention is to provide a man powered machine in which the operator need not be required to start an engine and to endanger pulling his arm out of socket in order to crank the mower, but the invention provides a tricycle frame and pedal operated mower arrangement so that a young person or an older person is capable of operating the assembly for purposes of conveniently cuttingthe grass while at the same time obtain exercise while grooming the yard.

We don't see many adult size tricycles like that presented in the invention's illustration available for sale in today's marketplace, so we can only assume the primary operators of the invention will be in the Age 4-6 demographic. To which we say to inventor Deanna Porath, well done!

The triple dip global recession from the coronavirus pandemic continued deepening in July 2021.

Evidence supporting that conclusion is visible in the falling rate at which carbon dioxide is being added to the Earth's atmosphere. The trailing year average of that rate continued to fall in July 2021, as shown in the latest update to the chart tracking its history since January 1960.

Since December 2019, a net reduction of 0.49 parts per million of atmospheric carbon dioxide has been recorded in the trailing twelve month average of the year over year rate of change in atmospheric carbon dioxide levels measured at the remote Mauna Loa Observatory. We can convert that change into an estimate of the lost GDP for the global economy using the following tool. If you're accessing this article on a site that republishes our RSS news feed, please click through to our site to access a working version of the tool.

Using these default values, we estimate the net loss to global GDP since the SARS-CoV-2 coronavirus emerged in China and began impacting the world economy is closing in on $16.3 trillion.

References

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Text File]. Updated 5 August 2021. Accessed 5 August 2021.

Previously on Political Calculations

Here is our series quantifying the negative impact of the coronavirus pandemic on the Earth's economy, presented in reverse chronological order.

• World GDP Still Shrinking from Coronavirus Pandemic
• Estimated Net Global GDP Lost to Coronavirus Pandemic Exceeds $15.6 Trillion
• Coronavirus Pandemic Sends Global Economy Into Triple Dip Recession
• Double Dip Global Coronavirus Recession Sees Second Bottom
• Net Global GDP Lost to Coronavirus Pandemic Tops $13.6 Trillion
• Global Double Dip Coronavirus Recession Deepens
• Global Economy Enters Double Dip Coronavirus Recession
• Global Economy Teeters on Double Dip Recession
• World GDP Lost Due to Coronavirus Reaches $12 Trillion
• Cumulative World GDP Loss From Coronavirus Pandemic Tops $11 Trillion
• Estimates of World GDP Lost to the Global Coronavirus Recession
• Finding Human Fingerprints in Atmospheric CO2
• The Coronavirus and Atmospheric CO2 in April 2020
• The Coronavirus, Atmospheric CO2, and GDP