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Market Update
August 31, 2021

US Corporate Profits Surge

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Thoughts Of The Week

US Corporate Profits Surge

While recent US-related news has focused on the deteriorating situation in Afghanistan, things seem to be on the up in corporate America. US second-quarter corporate profits have surged to an all-time high, rising 9.2% compared to last year’s second quarter. This is an acceleration of the first-quarter’s 5.1% increase compared to Q1 2020. Profits so far in 2021 are up nearly 70% year-on-year. Business spending has now shown double-digit growth for four consecutive quarters, and overall GDP growth expected for 2021 is 7%.

Inflation Update From the Fed Chair

Chair of the US Federal Reserve, Jerome Powell, has said the Fed is likely to begin tapering (slowing the pace of its quantitative easing - or QE) by the end of the year, but interest rate hikes are still a way off. He also reaffirmed that higher inflation is temporary and was mostly confined to certain categories which have risen off a low base due to the impact of lockdowns. Broad-based inflation remains generally moderate and is broadly in-line with the Fed’s 2% target.

The Week That Was…

In the US, July’s borrowing from businesses for capital investments rose 9% compared to last year whilst Congress approved a $3.5TN budget blueprint on Wednesday. It will be put to a vote in late September.

* Source 1

* Source 2

During summer when temperatures exceed 50C, Saudi Arabian residents normally head overseas in search of cooler weather. However this year, they have flocked to venues at home boosting sales resulting a 96.7% rise in spending at restaurants and hotels
in June.

* Source 3

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Market Overview.