This just in: CEO Chris Shuba on Schwab Network

Q3 earnings season has begun, and so far, roughly 80% of the S&P 500 companies that have reported are beating earnings estimates, which is slightly above average. The size of the beat so far has been well above average as well, typically beating estimates by nearly 15%, compared to the 5-year average of 8.4%.

The minutes for the last FOMC meeting were released, making it even more clear that the Fed will announce tapering in November, barring a major downside event, and the policy shift to begin in mid-November or December and lasting through the middle of next year.

September’s inflation rose 0.4% over August, slightly above the 0.3% expectation. Core prices, which exclude food and energy, increased 0.2%. Energy, particularly natural gas, pushed headline prices up along with broad-based food price increases, though largely tied to at-home (vs. restaurant) use. Airfares declined for the second month in a row, though they may rebound once Delta impacts begin to fall. While expectations are for inflation figures to run high into the first part of next year, the components of the report seem to be putting a dent into the “transitory” story, though that is clearly still the view of the Fed, and the market, so far.

Retail sales rose 0.7% in September, well above expectations that sales would fall by 0.2%, making it the second straight upside surprise. General merchandise and goods sales rose, likely helped by Delta cases peaking, which also pushed a slowdown in services spending. The upside surprise is welcome however, the shift back to spending on goods rather than services will further strain already majorly stressed supply chains, so start that holiday shopping early this year. As cases improve, we’d expect a shift back towards services spending.