Hello, this is James Mayer, Branch Manager, from the Huffman Mayer Wealth Management Group of Wells Fargo Advisors. 

 

 

1.       The “blended” EPS growth rate (which includes results for companies that have reported and consensus estimates for all other companies) for 3Q34 is currently 3.4%, according to FactSet. Looking beneath the surface, “Magnificant 7” stocks are expected to see 18.1% EPS growth this quarter, while the rest of the S&P 500 is forecast to grow EPS at 0.1%.

 

2.       U.S. average hourly earnings grew by 3.9% year-over-year in the month of September, roughly in line with the last 6 months of data. After factoring in the negative impact of inflation, “real” earnings growth (which equates to an increase in purchasing power) grew by 1.76% y/y. Workers take home pay grew throughout 2021-2022 as well, but not fast enough to keep up with inflation. 

1.       In honor of football season, we decided to look at NFL Football teams as an investment. We examined the internal rate of return on five of the NFL’s franchises that have been at least partially owned by the same family, along with the “new” Cleveland Browns franchise that was created in 1999. These comparisons only include data on initial purchase price and current Forbes valuation of the teams, and ignore cash flows in and out over the years. Over the varying time periods, all of these teams generated greater returns than the S&P 500. For reference, the IRR for the “new” Cleveland Browns since 1999 has been 9.5% under the Lerner and Haslam families.  

In Summary:

1.       Mag 7 earnings growth is expected to account for nearly all of the earnings growth for the S&P 500 in 3Q24.

2.       Workers are seeing some growth in nominal and real (net of inflation) wages again, after raises failed to keep up with inflation for much of 2021-2022.

3.       NFL Football teams have been an excellent investment over the decades, with rates of return as high as 22.1% in the case of the Kansas City Chiefs (1963-present).

 

 

 

 

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As always stay happy, safe, and healthy and hopefully we will see you very soon.

 

Huffman Mayer Wealth Management Group of Wells Fargo Advisors

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