The market for new homes in the U.S. shrank in October 2021. The initial estimate of the market cap itself for the month is $28.31 billion, which is 0.9% less than one year ago, and 6.0% below December 2020's peak of $30.12 billion.

The market for new homes in the U.S. has shrunk in both real and nominal terms.

Meanwhile, the annualized number of new homes being sold in the U.S. has nearly dropped to levels last seen in December 2019.

The shrinking new home market represents a source of headwinds for the U.S. economy in 2021. We'll follow up with a look at the affordability trends for new homes later this week.

References

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

U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 24 November 2021. 

A lot can happen to the outlook for the S&P 500 (Index: SPX) with the random onset of new information.

Friday, 26 November 2021 provides a good example. After having been closed for the Thanksgiving holiday, what is normally a low volume trading day instead turned into a noteworthy event because of the development of what is now being called the Omicron variant of the SARS-CoV-2 coronavirus, which prompted new global travel restrictions with the countries in Africa where the new potentially vaccine-resistant variant was detected.

The initial events related to the new variant took place while U.S. markets were closed on Thursday, 25 November 2021, so by the time markets opened on Friday, stock prices gapped down at the open, then proceeded to close some 2.27% lower than they had previously closed on Wednesday, 24 November 2021.

From our perspective, the change in stock prices is consistent with a small Lévy flight event, as U.S. investors shifted their attention from 2022-Q2 inward toward the nearer term quarters of either 2021-Q4 or 2022-Q1. As it happens, that change moves the trajectory of the S&P 500 from the upper edge of the redzone forecast range on the alternative futures chart back into the middle of the range, which is telling.

We're able to make that determination because of the assumptions we made when we initially set up the redzone forecast range many weeks ago. We had assumed investors would be focusing on the upcoming quarter of 2022-Q1 in the final weeks of 2021-Q4, where we set the middle of the future end of the range to correspond to the dividend futures-based model's projection for what the level of the S&P 500 index would be if investors were focusing on that point of time in the future. (The trajectory associated with 2022-Q1 is not much different from that for 2021-Q4, which is why we say investors may be focusing on either of these quarters.)

We're also fortunate in that we're near the end of period where the past volatility of stock prices prompted us to generate a redzone forecast range in the first place. Just looking a little further forward to the end of the forecast range to look at the relative positions of the trajectories for 2021-Q4/2022-Q1 and 2022-Q2 confirms a shift in investor focus from 2022-Q2 toward the earlier quarters would lead to a shift in the level of the S&P 500 of the magnitude that has occurred.

Since this is an example of how the random onset of new information affects stock prices, here are the headlines we noted for their market-moving potential during the holiday-shortened Thanksgiving trading week.

Monday, 22 November 2021

• Signs and portents for the U.S. economy:
• U.S. home sales rise to nine-month high; supply still tight
• Chief Fed minion gets to keep job, mention being concerned by inflation:
• Biden renominates Powell as Fed Chairman, Brainard as vice chair
• Powell's rollercoaster ride at the Fed: From 'enemy' to economic savior
• Explainer-Whether centrist or progressive, Fed's new regulatory chief has long to-do list
• Powell's reappointment gives investors stability
• Powell, Brainard nod to inflation threat in nomination remarks
• Bigger trouble developing in Eurozone:
• Germany's economy is taking a breather but inflation isn't, Bundesbank warns
• Euro slides on Merkel call for tighter COVID curbs, Austria in lockdown
• ECB minions disappointed Eurozone banks aren't as green as they'd like:
• Euro zone banks still missing ECB's climate risk goals
• S&P 500 ends lower after Powell nomination
• S&P 500, Nasdaq hit record highs after Powell nomination

Tuesday, 23 November 2021

• Signs and portents for the U.S. economy:
• Bond investors ramp up US inflation, rate-hike expectations - Russell Investments
• Biden vows U.S. will get through spike in gasoline prices
• U.S. challenges OPEC+ with coordinated release of oil from reserves
• Oil rises 3% to one-week high after U.S. taps emergency reserves
• Fed minion impressed with keeping same boss:
• Fed's Bostic: Powell, Brainard appointments remove uncertainty for Fed
• Analysis-Investors bet Powell's Fed will get more aggressive on inflation
• Recovery signs and causes for concern in Eurozone:
• Euro zone November growth surprisingly strong but outlook darkens -PMI
• German business activity picks up in November, as price pressures hit record high - PMI
• French business activity stronger than forecast in Nov - flash PMI
• ECB minions worry about inflation:
• ECB's Schnabel sees risk of higher inflation: report
• Nasdaq tumbles for second day as Big Tech loses ground

Wednesday, 24 November 2021

• Signs and portents for the U.S. economy:
• U.S. new home sales rise in October, September revised down
• U.S. consumer spending surges in October; inflation heats up again
• Oil steadies as investors question reserve release
• U.S. economy eyes strong 2021 finish as labor market tightens, spending accelerates
• Fed minions thinking about moving faster to hike rates to fight inflation:
• More Fed officials open to faster bond-buying taper, quicker rates liftoff
• Gloomy signs in Eurozone:
• German business morale darkens on supply bottlenecks, COVID wave
• Bundesbank chief sees upside risks to inflation
• Wall Street ends higher; Nvidia surge offsets Nordstrom, Gap slide

Thursday, 25 November 2021

• Coronavirus pandemic developments with potential market impacts:
• S.Africa detects new COVID-19 variant, implications not yet clear
• Explainer: What we know about the new COVID-19 variant detected in South Africa

Friday, 26 November 2021

• Signs and portents for the U.S. economy:
• New Covid-19 variant raises risk of recovery limbo
• Oil settles down $10/bbl in largest daily drop since April 2020
• Fed minion counting on inertia to beat "nu" COVID threat:
• Fed's Bostic says he is hopeful momentum will carry economy through new COVID variant
• Signs of recovery in Japan, politicians want to assist inflation as more stimulus rolls out, bank bailout widens:
• Japan factory output to post first rise in 4 mths as bottlenecks ease: Reuters poll
• Japan PM Kishida urges companies to raise wages by 3% or more
• Japan approves extra budget, worries rise over debt pile
• Nearly 90% of Japan regional banks receive payments under BOJ scheme
• ECB minions may get wish to keep interest rates low, but are still planning to end emergency stimulus support:
• Money markets scale back ECB rate hike bets on coronavirus variant worries
• ECB sticks to ending emergency support in March despite new COVID threat
• Stocks tumble on new coronavirus variant fear
• Analysis-New COVID scare sparks rate rethink in markets
• Traders pile into defensive options plays as COVID-19 fears return

The CME Group's FedWatch Tool is still projecting a quarter point rate hike in June 2022, the odds of additional hikes later in the year have dropped below 50% with last week's pandemic developments.

We're posting this super early in the morning to help get you off to a strong start in solving a problem you already have. That problem? What to do with the leftovers now crowding your refrigerator from yesterday's Thanksgiving dinner!

Sam the Cooking Guy has a solution for what to do with your leftover stuffing: use it in your breakfast omelette! We've queued up the following video to get you going. Just a quick note before you start watching - he does a commercial for SimpliSafe's home security system during it, so when you get to it at about the 4:47 mark, you can skip past nearly all of it by advancing the video to the 6:06 mark:

Here's the quick list of ingredients in the order they're added to the non-stick skillet (at low heat):

• Salted butter
• Leftover stuffing
• Eggs (he uses three eggs beaten with salt and pepper)
• Cheese (he uses two slices of American singles)

And that's pretty much it. If you want help with the rest of your leftovers, we have some options listed below from previous Thanksgivings....

• The Remains of the Bird
• Money Making Ideas for Thanksgiving Leftovers
• Thanksgiving 2011: What to Do with the Leftovers?
• The Turkey Day Hangover

For as long as we've celebrated Thanksgiving at Political Calculations, we've never once provided any information for doing the one thing most Americans' Thanksgiving dinners depend upon. Cooking a turkey.

Sure, we've featured information on how to carve a turkey. We've twice featured information on how to avoid hurting yourself and others when cooking a turkey. And we've featured the Swedish Chef cooking a turkey, although to be fair, no turkey was actually cooked during that production.

So we're going to rectify that situation today by featuring two videos that will take you through the process of cooking a turkey! But before we begin, let's just say that if your turkey is still frozen rock solid, you should skip the videos and find out what restaurants might be open near you instead....

Our first featured video will take you through the basics of what you need to know about the full process of cooking a turkey in about 12 and a half minutes. Please be aware the process in real life takes much longer....

Our second video runs a little over eight minutes and features much of the same information, but is aimed for a slightly different audience. An audience that's somewhat intimidated by not just cooking a turkey, but being judged for how well they might cook it.

Have a Happy Thanksgiving, and good luck with your turkey this year!

P.S. We're not done with cooking tips, so check back in tomorrow for an idea of what to do with your Thanksgiving dinner leftovers!

In 2020, the average live weight of a turkey raised on a U.S. farm was nearly unchanged from 2019's final recorded average of 32.7 pounds per bird. That stagnation ended what had been a 40 year long trend of growth in the average size of turkeys produced on U.S. farms.

In the chart above, we've shown that new trend of stagnation continuing based on early signs that production factors such as the rising costs of feed, fuel, and labor for producing turkeys in the U.S. will affect the growth of the average turkey much the same as it did during the inflationary 1970s. Should the finalized data for 2021 confirm that's the case when it is released next year, it will indicate U.S. turkey producers are dealing with today's inflation similarly to how they did during that period of relative stagnation for the U.S. economy.

References

U.S. Department of Agriculture National Agricultural Statistics Service. Livestock Historic Data. [Online Database: Survey - Animals & Products - Poultry - Turkeys - Production - Turkeys Production Measured in Head - Total - National - US Total - 1929-2021 - Annual - Year]. Accessed 14 November 2021.

U.S. Department of Agriculture National Agricultural Statistics Service. Livestock Historic Data. [Online Database: Survey - Animals & Products - Poultry - Turkeys - Production - Turkeys Production Measured in LB - Total - National - US Total - 1929-2021 - Annual - Year]. Accessed 14 November 2021.

An estimated 214 million turkeys were raised on U.S. farms in 2021, down 4.5% from 2020's 224 million. That decline continues an ongoing downward trend that has now lasted for 25 years.

2021 saw the fewest number of turkeys produced on U.S. farms since 1986. Turkey production had soared during the late 1980s and early 1990s thanks to that era's low-fat diet craze, which saw a sharp increase in demand for lean turkey meat.

On a side note, we now have turkey production data going back to 1929!

References

U.S. Department of Agriculture National Agricultural Statistics Service. Livestock Historic Data. [Online Database: Survey - Animals & Products - Poultry - Turkeys - Production - Turkeys Production Measured in Head - Total - National - US Total - 1929-2021 - Annual - Year]. Accessed 14 November 2021.

The cost of providing a traditional Thanksgiving turkey dinner to 10 people in 2021 is 14% higher than a year ago. The same food that cost $46.90 in 2020 now costs $53.31.

That's according to the results of the American Farm Bureau Federation's annual survey of the cost of a Thanksgiving dinner were released one week before Thanksgiving 2021. In the following chart, we've visualized the Farm Bureau's year-over-year comparison of the costs of the food in their traditional Thanksgiving turkey dinner shopping list.

In the chart, we've ranked the cost of the individual items and groupings used by the Farm Bureau for their traditional turkey dinner menu from high to low according to their 2021 cost as you read from left to right. We've also tallied the cumulative cost of the meal, with the totals for each shown on the far right side of the chart.

Ranking the data this way lets us see that the increase in the cost of turkey is responsible for most of the year-over-year increase. Rising by $4.60 from 2020's $19.39 to 2021's $23.99 for a 16-pound bird, turkey alone accounts for nearly 72% of the year-over-year increase in the total cost for the meal.

Why are turkeys so much more costly in 2021? Here's a partial explanation:

Last Friday, the USDA's Turkey Market News Report showed that smaller 8- to 16-pound frozen turkeys were selling for $1.41 per pound, up from $1.15 the year before, a 22 percent increase. Large frozen turkeys were selling for a couple cents less. Meanwhile, fresh small birds were more expensive — $1.47 per pound — though the year-over-year increase was less, only 15 cents. Exacerbating the issue is that the total number of turkeys for 2021 is also down: six percent lower year-to-date in 2021 than in 2020.

Justin Benavidez, assistant professor of agricultural economics with Texas A&M's AgriLife, told the nearby KRHD News that this decreased production was the primary cause of the price increase. "This is actually one of those rare situations where the pandemic didn't have much to do with the supply and demand of turkey," he was quoted as saying.

But Gregory Martin, a poultry educator with Penn State Extension, didn't entirely agree, instead pointing to larger inflation concerns. "Prices are going to go up simply because of the cost to get the birds in the store," he told Lancaster Farming.

We'll be looking closer at American turkeys all this week!

References

American Farm Bureau Federation. Farm Bureau: Survey Shows Thanksgiving Dinner Cost Up 14%. [Online Article]. 18 November 2021.

American Farm Bureau Federation. Thanksgiving Dinner Cost Survey: 2021 Year to Year Prices. [PDF Document]. 18 November 2021.

After being beaten back by rising inflation concerns, the S&P 500 (Index: SPX) rebounded to reach a new record high closing value of 4,704.54 on Thursday, 18 November 2021, but retreated below that level to end the week at 4,697.96.

From the perspective of the alternative futures spaghetti forecast chart, the trajectory of the S&P 500 is riding just within the upper end of the redzone forecast range.

We suspect that investors are refocusing their forward-looking attention on 2022-Q2 since the Federal Reserve is now expected to initiate a new round of Federal Funds Rate hikes to address the persistent inflation that has developed since January 2021. The CME Group's FedWatch Tool is anticipating two, maybe three rate hikes in 2022 for the Federal Funds Rate set by the U.S. Federal Reserve. The FedWatch Tool predicts a greater than 50% probability for at least two quarter point rate hikes, the first in June 2022 and the second in September 2022, but is now giving just under a 50% probability of a third quarter point rate hike in December 2022.

Here are the market moving headlines from the third week of November 2021:

Monday, 15 November 2021

• Signs and portents for the U.S. economy:
• Oil settles mixed on questions over crude supply, demand, strong dollar
• Biden, needing a boost, to sign $1 trillion infrastructure bill
• Most dovish Fed minion starting to expect 'transitory' inflation will linger:
• Fed's Kashkari expects higher inflation continuing over next few months
• Mixed economic signs in China:
• China industrial output, retail sales accelerate but property clouds outlook
• China property hit by rare convergence of demand, supply declines
• Bigger inflation developing in Japan:
• Japan's economy shrinks more than expected as supply shortages hit
• ECB minion really wants to keep emergency stimulus measures going, willing to disregard market messages:
• ECB's Lagarde keeps pushing back on rate hike bets and hopes
• Wall Street ends little changed as rising yields weigh on tech

Tuesday, 16 November 2021

• Signs and portents for the U.S. economy:
• U.S. import prices surge in October on petroleum, food
• U.S. manufacturing output races to 2-1/2-year high
• Oil settles mixed on tight inventories, demand worries
• U.S. retail sales surge as Americans kick off holiday shopping, brighten economic outlook
• Fed minions beg for more time to act on inflation:
• Barkin says Fed needs 'a few more months' to see clear picture of inflation, labor market
• Bigger trouble developing in China:
• Analysis-China's real estate woes sap property investment products
• ECB minions may be creating a problem for the Euro:
• Analysis-Latest ECB rate-hike pushback turns euro into falling knife
• Retail boost helps lift S&P 500

Wednesday, 17 November 2021

• Signs and portents for the U.S. economy:
• U.S. homebuilding drops, construction backlog surges as shortages worsen
• Inflation, monetary tightening could heighten systemic risks -U.S. Treasury research office
• Fed minions starting to think inflation may be a problem:
• Fed officials say high inflation weighing on consumers and needs to be controlled
• Fed's inflation debate heats up as Biden nears Fed chair pick
• Fed's Daly: next step for Fed is forward guidance
• NY Fed's Williams says Treasury market needs to be shored up for next big shock
• Bigger inflation developing in Eurozone, UK, Canada:
• Euro zone Oct inflation confirmed at 4.1% y/y on energy spike
• UK inflation leaps to 10-year high, bolstering rate hike bets
• Canada's annual inflation rate matches 18-year high, set to keep rising
• ECB minions thinking they may have to deal with a housing bubble in addition to inflation:
• ECB sees rising risk that housing bubble will burst
• ECB must be attentive and vigilant on inflation: de Guindos
• ECB must be ready to act if inflation proves more durable: Schnabel
• Wall Street down as retailers stoke inflation fears

Thursday, 18 November 2021

• Signs and portents for the U.S. economy:
• U.S. economy regaining speed as unemployment claims fall; manufacturing surges
• Biden's $1.75 trillion bill is not fully paid for, Congressional Budget Office says
• Yellen insists $1.75 tln U.S. social, climate spending bill 'fully paid for'
• Oil hovers above six-week low as China readies crude reserve release
• Exclusive: China reserve bureau working on crude oil release
• Fed minions moving up plan to hike rates, one focused on other issues:
• Fed policymakers start penciling in earlier U.S. rate hikes
• Fed's Bostic: could start normalizing interest rates next summer
• Fed to hike in Q4 next year; inflation to remain above target until 2024: Reuters poll
• Fed's Daly says dependent care is essential to supporting work
• Bigger stimulus developing in Japan:
• Japan's stimulus package spending to hit record $488 billion - Nikkei
• ECB minion hoping inflation will go away:
• ECB's Lane still expects euro zone inflation to ease next year
• S&P, Nasdaq end at record peaks on strong earnings

Friday, 19 November 2021

• Signs and portents for the U.S. economy:
• U.S. Thanksgiving dinner cost jumps with inflation on the menu, though deals remain
• Oil dives 3% to below $80/bbl on resurgent pandemic in Europe
• As Fed contemplates a move, Democratic states lag furthest in jobs recovery
• Fed minions starting to think they need to taper faster to stop inflation, maybe shouldn't coordinate policies with other central banks:
• As inflation surges, Fed to debate faster taper, earlier rate hikes
• Fed policymakers to debate a faster end to bond-buying
• Fed's Waller favors doubling speed of bond taper in January, be done by April
• Fed's Clarida: global central banks should not coordinate policy
• Bigger trouble developing in Eurozone:
• Europe lockdown rattles Wall Street, boosts safe-havens
• Central bank minions hiking rates to fight inflation, ECB minions expecting inflation:
• New Zealand central bank on a hiking spree as economic climate gets hotter
• ECB's Weidmann says inflation might stay above 2% for some time
• Weidmann contradicts ECB on easy policy ahead of December meeting
• Nasdaq closes above 16,000 for the first time; Dow down again
• Safe havens surge, oil sinks as investor seek COVID

We're shifting gears for the rest of the week with our annual week-long celebration of Thanksgiving, starting with a look at the inflation in the cost of a traditional Thanksgiving turkey dinner for 2021.

Power laws show up in a lot of different places. That includes things like stock prices and income distributions, which is why developments in maths related to the topic of power laws catch our attention.

That brings us to a story from earlier this year that we've recently caught up with. We came across it via a university's PR news release with the clickbait title "Financial crashes, pandemics, Texas snow: How math could predict 'black swan' events".

We don't think much of that type of PR sensationalism, so we set it aside to review later. After all, we've seen the PR departments at universities function much like those scam scientific journals that will literally publish gibberish if you pay them. Usually after we get to reviewing such pieces, we end up sweeping the stories into the garbage. Where most of them belong.

This one turned out to have some meat behind it. It relates to when and how Taylor's Law may be successfully used to estimate the variance of a population based on the mean of smaller samples measuring it.

Named after ecologist Lionel Roy Taylor, who developed it after realizing the total variance of the animal population in a region (such as moths) is proportional to a power of the mean of the sampled population of animals counted at the same time at several different sites within it (such as the counts of moths captured overnight in traps spread over the region).

Here's the basic math formula for Taylor's Law:

Variance = A*(Mean)B

In this power law equation, A and B are constant values, the mean is that for the different samples of the population, and the resulting variance applies for the total population. This expression becomes a linear equation when using logarithms:

log(Variance) = log(Constant A) + (Constant B)*log(Mean)

It had been assumed that Taylor's Law would only work well when dealing with a population whose variance in either space or time is described by a normal Gaussian distribution, the kind represented by a standard bell-curve in statistics. Joel E. Cohen, Richard A. Davis, and Gennady Samorodnitsky however have demonstrated in a 2020 paper that Taylor's Law holds for heavy-tailed distributions.

The difference in the variance between a normal-tailed distribution and a heavy-tailed distribution in statistics is that more extreme variances are more likely to be seen in heavy-tailed distributions. The variation of stock prices is a good example, because big changes in them are observed much more frequently than are predicted by normal variance distribution statistics. That has real world meaning because the failure to recognize that fact has resulted in some of the investing world's biggest failures.

Cohen, Davis, and Samorodnitsky see how their work might be extended beyond its native field of ecology:

Until now, Taylor's Law was thought to have no place in these heavy-tailed systems. It helped plot our paths along the normal circumstances of daily life, but when it came to extreme occurrences like the present pandemic, Taylor's Law seemed irrelevant.

But a few years ago, Cohen and colleagues at Columbia University made a striking discovery—a way of looking at heavy-tailed variables that yields surprisingly orderly connections between the mean and the variance. "It was as if we took all of the pieces of a car, put it in a box, and the car still ran," Cohen says. "This combination of variables gave us the same result regardless of how they were connected."

A collaboration of excited mathematicians culminated in this new study, which collects many more examples of the phenomenon and concludes with mathematical proof that extreme, heavy-tailed events are indeed well described by Taylor's Law.

This does not mean that any individual extreme event can be predicted with a simple mean-to-variance formula. But the research effectively breaks Taylor's Law out of its shell, giving scientists good reason to test whether market fluctuations and natural disasters obey the same Taylor's Law that governs insect populations and the progression of cancerous growths.

Cohen hopes that this work will stimulate further basic research on the mathematics of heavy-tailed distributions and that scientists will use it to better understand the extreme events wherever heavy-tailed distributions lurk. "Advances like these are the mathematical analogue of bioimaging," he says.

"They make it possible to see what was previously invisible."

Potentially. It will be exciting to see.

References

Joel E. Cohen et al. Heavy-tailed distributions, correlations, kurtosis and Taylor's Law of fluctuation scaling, Proceedings of the Royal Society A: Mathematical, Physical and Engineering Sciences (2020). DOI: 10.1098/rspa.2020.0610. [Ungated PDF Document].

J.N. Perry. Taylor's Power Law for Dependence of Variance on Mean in Animal Populations. Journal of the Royal Statistical Society. Series C (Applied Statistics). Vol. 30, No. 3 (1981), pp. 254-263. DOI: 10.2307/2346349.

Adam Tumerkan. Hunting and Profiting from 'Fat Tails' - Be Long HighVol Assets. Seeking Alpha. [Online Article]. 20 July 2017.

Previously on Political Calculations

• Deriving the Price Dividend Growth Ratio
• Leaving Brownian Motion Behind
• Prime Numbers and Benford's Law
• A Striking Thought....
• Power Curves and Statistical Equilibrium Charts
• The Lognormal Distribution of a Viral Post
• The Lévy Stable Distribution of Stock Prices
• Replacing Zipf's Law in Modeling Growth of Cities

Image Credit: Adem Tumerkan.

Three months ago, we took the first snapshot of the expected future for quarterly dividends per share for the S&P 500 (Index: SPX) through the end of 2022. Here's what that future looks like as of the close of trading on 11 November 2021:

The past and projected data shown in this chart is from the CME Group's S&P 500 quarterly dividend index futures. The past data reflects the values reported by CME Group on the date the associated dividend futures contract expired, while the projected data reflects the values reported on 11 November 2021. This matches the timing of when we took our latest snapshot of the index' expected future earnings per share.

Since our last snapshot, the levels of the S&P 500's expected quarterly dividends per share has increased across the board for each quarter but 2022-Q2, which is unchanged at $15.54 per share. In the near term, cash dividend payouts expected during 2021-Q4 have risen from $14.87 to $15.36, while 2022-Q1's projected dividends have risen from $16.03 to $16.20. In the more distant future, dividends in 2022-Q3 rose from $15.17 to $15.51 per share, while 2021-Q4's dividends per share increased from $15.12 to $15.51.

About the Numbers

Dividend futures indicate the amount of dividends per share to be paid out over the period covered by each quarters dividend futures contracts, which start on the day after the preceding quarter's dividend futures contracts expire and end on the third Friday of the month ending the indicated quarter. So for example, as determined by dividend futures contracts, the "current" quarter of 2021-Q4 began on Saturday, 18 September 2021 and will end on Friday, 17 December 2021.

That makes these figures different from the quarterly dividends per share figures reported by Standard and Poor, who reports the amount of dividends per share paid out during regular calendar quarters after the end of each quarter. This term mismatch accounts for the differences in dividends reported by both sources, with the biggest differences between the two typically seen in the first and fourth quarters of each year.

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.

Since our last update three months ago, Standard and Poor has updated their projections to indicate stronger earnings growth going into 2022.

S&P is also forecasting slower earnings growth during 2022.

Reference

Silverblatt, Howard. Standard & Poor. S&P 500 Earnings and Estimates. [Excel Spreadsheet]. 11 November 2021. Accessed 12 November 2021.

Arizona is seeing an upswing in the number of COVID cases in the state. As best as we can tell using the back calculation method, the new uptrend for cases began with a change in the rate of incidence of exposure to the viral infection approximately between 8 October and 11 October 2021. The following chart shows the latest trends for the number of COVID cases, hospital admissions, and deaths indexed to the approximate date of when those infected were initially exposed to the variants of the SARS-CoV-2 coronavirus being transmitted within the state.

The state's detailed data for hospital admissions and deaths is still as yet too incomplete to tell if they will follow the pattern for the uptrend in cases. The impact of the COVID vaccines combined with improved treatments however has clearly made COVID less serious than it was during 2020.

The period of 8 October through 11 October 2021 was characterized by what might be considered several mass exposure events within the state. Here's a sampling of sporting events that drew thousands in attendance to each:

• Suns run open practice with thousands in attendance; Booker talks NBA 75 shoot
• Arizona falls to UCLA, extending losing skid to 17 straight; QB Jordan McCloud injured
• UCLA vs. Arizona State Week 5: Postgame Takeaways
• ASU football rides hot offensive start, take down Stanford
• Opinion: ASU should be taking more COVID-19 precautions at football games
• Cardinals earn forgettable win over 49ers to stay atop NFC West
• San Francisco 49ers at Arizona Cardinals - October 10th, 2021

That's just the sporting events in the state during that period, without including things like tailgate parties or other social gatherings that could constitute significant exposure events.

We were curious to see if Arizona's COVID data could provide more insight into where cases are now arising in the state. The following image is a snapshot of COVID cases by ZIP code in the state, where the darker red the color, the greater the number of cases in the last month.

The map is fascinating because with a few exceptions it shows the higher levels of new COVID cases in ZIP codes are taking place in regions that might be considered to be the suburbs and exurbs of the Phoenix and Tucson metropolitan areas. Here's the short list of the ZIP codes that became the darkest red during the past month:

• 85706: 793 cases
• 85142: 792 cases
• 85338: 792 cases
• 85345: 771 cases
• 85326: 763 cases
• 85122: 717 cases
• 85009: 713 cases

It would be interesting to see if those testing positive for COVID-19 infections in these ZIP codes share any common characteristics. Arizona's public data for infections at this level however doesn't provide enough detail to tell.

Previously on Political Calculations

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

• Arizona's COVID Hospital Admissions Unexpectedly Plunge
• All Indicators Confirm COVID Third Wave Receding in Arizona
• Arizona's Third COVID Wave Peaks and Begins to Recede
• Arizona COVID Cases Rising in Third Wave
• 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

Political Calculations has been following Arizona's experience with the coronavirus experience from almost the beginning, because the state makes its high quality data publicly available. Specifically, the state's Departent of Health Services reports the number of cases by date of test sample collection, the number of hospitalizations by date of hospital admission, and the number of deaths by date recorded on death certificates.

This data, combined with what we know of the typical time it takes to progress to each of these milestones, makes it possible to track the state's daily rate of incidence of initial exposure to the variants of the SARS-CoV-2 coronavirus using back calculation methods. Links to that data and information about how the back calculation method works are presented below:

Arizona Department of Health Services. COVID-19 Data Dashboard: Vaccine Administration. [Online Database]. Accessed 15 November 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.

In last week's edition of the S&P 500 chaos series, we made a point of recognizing the S&P 500's recent winning streak, which lasted just one more day after we commented on it. Alas, it ran into a wall of unexpected inflation, which snapped the streak to a close.

From our perspective, it's interesting to see the upper end of the redzone forecast range marked the top for the index' streak, although we recognize that's a coincidence. We do wonder though what the redzone forecast range would look like if we had anticipated how the outlook for investors would change when President Biden's proposed tax rate hikes died on Capitol Hill.

Getting back to the streak itself, Schaeffer's Investment Research's Rocky White was impressed enough to recount the history of the S&P 500's previous 8-day or longer winning streaks with record-high closes:

The S&P 500 Index (SPX) just did something it hasn’t done in nearly 25 years. On Monday, it closed at an all-time high for the eighth day in a row. The streak came to an end with yesterday’s down day. The table below shows data on each streak and how the index did going forward.

In the short term, the S&P 500 was down a week later in three of the past four occurrences. So, if we struggle in the short-term, it should not be a surprise. Three months later, however, the index was higher after all seven previous instances. This week I’ll look at how these future returns compare to typical market returns and similar streaks for the Nasdaq Composite (IXIC), which also had eight straight days of all-time highs.

White continues reviewing the historic record to see how investors fared after the S&P 500 or its predecessor indices ran a record-high setting streak:

The table below shows how the S&P 500 performed after each of these streaks ended. There are limited data points, but an end to the streak has not been an indication of buying exhaustion; stocks have tended to do well even after the streaks ended. Perhaps one thing to be wary of is the two signals that occurred within a year just before the Great Depression and then you have two signals within a year in 1964, after which stocks struggled. We haven’t had two streaks of eight recently but earlier this year we had a streak of seven straight all-time highs. Any one signal of all-time high streaks may be nothing to worry about, but if they become more prevalent, perhaps it can signal a major top.

In other words, pretty much anything can happen. What will happen will be paced by the random onset of new information, such as what we saw in the market-moving headlines of the past week:

Monday, 8 November 2021

• Signs and portents for the U.S. economy:
• U.S. consumers' income and spending expectations reach 8-year high
• Fed minions confounded by real world data, claim inflation will just go away, want two rate hikes in 2022 after stimulus bond buys stop, focus on gender gap to fix economy, starting to be concerned by housing inflation:
• Fed officials turn focus to rate debate, eye on jobs, inflation
• Analysis-Flatlining participation, rising wages leave Fed employment puzzle unresolved
• Fed's Evans: inflation rise is 'temporary,' but sees upside risk
• Fed's Bullard says he sees two rate hikes in 2022
• Fed's Harker says he does not expect rates to rise until taper is complete
• Fed's Powell says bridging gender gaps key to successful economy
• Fed's Bowman sees risks in housing market, flags inflation pressure
• Fed's Randal Quarles to resign at end of December
• Bigger trouble and stimulus developing in Japan:
• Japan cuts economic view after key indicator falls to lowest in a year
• Japan economic stimulus seen topping $265 billion, requires new debt -Kyodo
• ECB minions claim high Eurozone inflation will just go away, want to keep stimulus policies going:
• High euro zone inflation temporary, ECB's Lane says
• ECB policy tightening could be counterproductive, says bank's chief economist
• Wall Street closes up on infrastructure gains but Tesla weighs

Tuesday, 9 November 2021

• Signs and portents for the U.S. economy:
• U.S. producer prices increase solidly in October
• Gasoline, auto retailing boost U.S. producer prices
• Fed minions wants to keep stimulus going, want to wait until next year to see where economy is going, want to hold off rate hikes:
• Fed's Powell touts benefits of maximum employment
• Fed's Daly looks to mid-2022 for more clarity on jobs, inflation
• Fed's Kashkari: Keeping an 'open mind' on timing of rate hikes
• Bigger stimulus developing in Japan:
• Japan PM says crafting stimulus package to achieve 'virtuous' growth
• Bigger trouble developing in the Eurozone, China, Mexico:
• German exports fall for second consecutive month in September
• Germany economy lagging behind Europe supply chain
• Chinese property bonds dive as contagion kicks in
• China property dives as Kaisa pleads for help, Fed warns of contagion
• Analysis-Corporate Mexico feels heat from global supply chain crunch
• ECB minions notice central bank's stimulus policies are hurting banks, say housing inflation to continue, more inflation on the way:
• Low ECB rates are now hurting banks; issue to persist, ECB's Enria says
• ECB can't ignore developing housing bubble, Schnabel says
• Euro zone housing demand to persist, hitting poorer households - ECB
• ECB must prepare for higher inflation - Knot
• Wall Street declines, ending a run of record highs
• D.R. Horton profit jumps as house shortages fuel price surge

Wednesday, 10 November 2021

• Signs and portents for the U.S. economy:
• Surging gasoline, food prices fan U.S. inflation; labor market tightening
• Biden says reversing inflation a top priority, targeting energy costs
• Biden to sign $1 trillion infrastructure bill on Monday
• Bigger trouble developing in China:
• China vehicle sales fall 9.4% in October - industry body
• Bigger inflation developing all over:
• China's factory inflation hits 26-year high as power crunch bites
• Government advisers cut German growth forecasts, see more inflation
• ECB minions think productivity gains will go away, Japan gearing up for bigger stimulus:
• Europe's pandemic productivity growth surge may wane: ECB study
• Japan PM Kishida vows wide-ranging payouts in planned stimulus package
• Wall Street ends lower as economic data raises long-term inflation threat
• Hot October CPI weighs on stocks, lifts US yields
• Analysis-Flexible inflation targets a recipe for bond market turbulence

Thursday, 11 November 2021

• Signs and portents for the U.S. economy:
• Biden says CEOs tell him shelves will be full for holidays
• Fed minions not sure what transitory inflation means for policy, top job up for grabs between dove and uber-dove for fighting inflation:
• Fed's 'transitory' inflation plot thickens again with rate at 30-year high
• Powell or Brainard? Biden weighs his pick for U.S. Fed chair
• Bigger trouble developing in Japan:
• Japan's economy seen back in decline on COVID-19, supply issues - Reuters poll
• Bigger inflation developing in Japan:
• Japan's wholesale inflation hits 40-year high as fuel costs spike
• Around half of Japan firms looking to pass on rising commodity costs to customers - Reuters poll
• S&P closes little changed as chips boost Nasdaq in muted holiday trading

Friday, 12 November 2021

• Signs and portents for the U.S. economy:
• Biden Team Debates Whether to Act Fast on Oil Prices or Wait
• U.S. workers quitting reaches record high, job openings edge down in September
• U.S. consumer sentiment plunges to 10-year low on inflation worries -UMich
• Fed minions make show of plan to taper stimulus bond buys, discover poor are hurt more by inflation:
• NY Fed releases first monthly bond-buying schedule reflecting taper
• NY Fed's Williams says fixed income households more affected by high inflation
• Bigger trouble, stimulus developing in Japan:
• Japan Oct exports seen snapping double-digit growth as car shipments falter - Reuters poll
• Japan plans stimulus of $350 billion to ease pain of COVID-19, oil costs
• Positive signs in the Eurozone:
• Euro zone industry output stronger than expected in Sept
• ECB minions want governments to spend more to keep inflation higher, BOE minions want to hike rates to fight inflation:
• ECB asks for governments' help to hit inflation goal
• Euro zone inflation decline may be slower: policymakers
• Euro zone inflation to remain above ECB's target next year - Reuters poll
• Bank of England to be first major bank to hike rates, probably in December - economists polled by Reuters
• Wall Street ends higher with boost from big tech
• Column: Wall Street dancing to real yield tune amid inflation mood music
• S&P 500 Seeing Head-Turning Buybacks

The CME Group’s FedWatch Tool is now projecting a greater than 50% probability of a quarter point rate hike in June 2022, followed by another in September 2022, and a third in December 2022. That’s a lot of change in just the past week.