Daily Stock Market Articles

November Winners
Fri, Dec 1, 2023

The average stock in the large-cap Russell 1,000 rose 9.77% in November, and 38 stocks gained more than 30%, 14 rallied more than 40%, and seven surged more than 50%.

Below are the 30 stocks that rose the most in November. For each name, we also include its market cap, its year-to-date total return, its distance from its 52-week high, and short interest as a percentage of float. As shown, buy-now-pay-later company Affirm (AFRM) was up the most in November with a huge gain of 95.4%, followed by streaming company Roku (ROKU), crypto-trading platform Coinbase (COIN), and digital payments company Block (SQ). Are we back in late 2020/early 2021??

Other notables on the list of big winners include Gap (GPS) with a gain of 56.8%, Expedia (EXPE) at 42.9%, Generac (GNRC) at 39.25%, and Palantir (PLTR) at 35.47%.



Below we've expanded the universe to show the top-performing stocks in the Russell 3,000 in November. The Russell 3,000 includes all the stocks in the large-cap Russell 1,000 and small-cap Russell 2,000.

Four stocks in the Russell 3,000 rallied more than 100% in November: Rocky Brands (RCKY), Bluegreen Vacations (BVH), Sight Sciences (SGHT), and TransMedics (TMDX). Rocky Brands is a $210 million market cap retailer that sells heavy-duty boots and other apparel. Bluegreen Vacations is a timeshare company. Sight Sciences creates medical devices and procedures for the eyes. And finally, TransMedics makes unique medical devices built to care for organs during the transplant process.



Before we go, below is a look at the stocks that have gained the most in market cap in 2023. Amazingly, twelve stocks have gained more than $100 billion in market cap this year, six have gained more than $500 billion, and one -- Microsoft (MSFT) -- has gained more than $1 trillion!

 

New Highs in 2024*
Mon, Dec 4, 2023

The equity market (and most other parts of the financial universe) has been in rally mode for about five weeks now, and while it would be greedy to think that the S&P 500 could rally the 4% needed between now and year-end to get back to its prior highs from the start of 2022, on a total return basis, the market is knocking on the door of new all-time highs. As shown in the chart below, the total return index is within 1.1% of its prior all-time high from 1/3/22. In addition to nearing its prior highs, the pattern of the S&P 500 looks a lot like a cup and handle which technicians consider to be a bullish formation.



For all the weakness that we've seen in the US Treasury market over the last couple of years, high-yield bonds have fared much better. As shown in the chart below, the iBoxx High Yield Total Return Index, which is the underlying index of the popular ETF (HYG), came into the week just 2.5% below its prior all-time high from 12/28/21. That's impressive in its own right, but even more noteworthy when you consider the fact that long-term Treasuries (20+ year maturities), long considered the 'safest' area of the fixed income sector, or all financial assets for that matter, are still down over 40% on a total return basis from their Summer 2020 peak.

 

Small Caps Heat Up

Three weeks ago we gave you a heads up that it was Open Season for Small Caps. The Russell 2000 small cap index was beginning to rally off its new multi-year low at the end of October. Though it was still lagging big caps. Small caps are leading again today. But beware there still may be some chop as you can see here in the chart before small cap season officially opens mid-December.

 

Gamers Now Play the Waiting Game
Tue, Dec 5, 2023

Take-Two Interactive's (TTWO) subsidiary, video game publisher Rockstar Games, has created some buzz in the past 24 hours. Originally scheduled for this morning, the company released the first trailer for the next installment of their popular Grand Theft Auto (GTA) series early last night after the video was leaked on X (formerly Twitter). The game will be set for a 2025 release and will be titled Grand Theft Auto 6 (GTA VI). The trailer has already broken the record for the most views of a YouTube video in under 24 hours (as of this writing it 77.3 million), and mind you, it hasn't even been a full 24 hours since the video was put up.

There is a lot of interest in GTA VI, especially seeing as the previous installment from over a decade ago ranks as the second best-selling video game of all time; grossing over a billion dollars in sales in the first three days of its release. Additionally, the upcoming game follows the publisher's last major title release, Red Dead Redemption 2, in 2018 which has earned the rank of the eighth best-selling game of all time. Despite any excitement from gamers, investors have been less receptive to TTWO's trailer as the stock is trading down 1.7% today. Below we show the performance of the stock surrounding other debuts of Rockstar Games' trailers and title releases going back to GTA: San Andreas in 2004 (this was the earliest example of a debut trailer for a game that we could find).

The GTA VI trailer targeted a 2025 release date for the game, which follows the formula of other recent releases with a roughly two-year lag time between a trailer and a game's debut. As shown, performance in the year following a trailer debut has been somewhat mixed, but TTWO has often traded higher between a Rockstar game's first trailer and when the game was released. So with the trailer out, investors and gamers alike will now be playing the waiting game until 2025.

 

Sideways
Tue, Dec 5, 2023

The S&P 500 Equalweight index, which gives each stock in the index an equal 0.2% weighting, is currently trading at the same level it was at back in April 2021. Investors used to getting the standard 8-10% per year in the US stock market have gotten far less than that over the last two and a half years.

Below is a five-year price chart of the S&P 500 Equalweight index showing the sideways range it has been in for the last few years.



The spread between the S&P 500 Equalweight's highest and lowest closing price over the last three years currently stands at 31%. As shown below, 31% is an extremely low 3-year high/low range; well below the average of 75.5% seen across all rolling 3-year periods going back to 1992. The tight spread now, though, comes after a period in which the high/low range had gotten well above its historical average. And the pendulum continues to swing...

 

10 Charts Showing Why We’re Not Yet Worried About the Consumer


I was recently asked whether I was worried about rising debt delinquencies. It is true that transitions into serious delinquencies (90+ days of late payments, capturing borrowers who have missed three or more payments) have been rising for auto loans and credit cards. For auto loans, transitions to serious delinquencies are at 5.8% as of Q3 2023, and it’s at 2.5% for credit cards – both slightly higher than pre-pandemic. One reason may be that student loan payments have restarted and so perhaps some borrowers are starting to find it hard to make all their payments.

So, is this a cause for concern for the broader economy?

Rising delinquencies are not a good thing, but focusing on that misses the overall strength of American households. I’m going to walk through 10 charts to illustrate this. Let’s start directly with auto loans and credits card debt.

1. Serious delinquencies of auto loans and credit cards are still relatively low
The percent of auto loans and credit cards that are seriously delinquent, as a percent of the respective totals, remains relatively low. For auto loans, it’s at 3.9% versus 4.9% in Q4 2019 (pre-pandemic). It’s at 9.4% for credit cards versus 8.4% pre-pandemic.



2. Mortgage debt is almost 5 times larger than credit cards and auto loans, and there’re no problems there
Auto loans and credit cards make up 9% and 6% of the $17 trillion of consumer debt, respectively. Mortgages make up 70% of consumer debt, while home equity loans make up another 2%. And right now, seriously delinquent balances on mortgages and home equity loans are running close to historical lows. Seriously delinquent balances on mortgages are just 0.5% of balances, versus 1.1% pre-pandemic. Home equity loans tend to be floating rate, and have seen rates surge over the last year, but even serious delinquencies there are at 0.7%, below the 0.8% we saw pre-pandemic.



3. Overall delinquent balances are well below what we saw pre-pandemic
The percent of total debt balances that were current on payments is at 97%, versus 95.3% pre-pandemic. In other words, only 3% of total balances are delinquent, versus 4.7% pre-pandemic. What’s striking is how the most derogatory balances (120-days late + severely) is just 1.5% of total balances. That’s well below the 2.8% pace we saw pre-pandemic.



4. Households still have a lot of liquid cash and savings
There’s been a lot of chatter about excess savings being depleted. You can run the numbers a lot of different ways, but right now it’s probably close to $1 trillion. However, we don’t need to look at numbers that change based on different assumptions and can instead just look at the amount of money households have in checking, savings, and money market accounts. There’s about $17 trillion across all of these, which is a whopping $2.7 trillion more than what you’d have expected based on the pre-pandemic trend.



5. Households are much less leveraged now
The overall household sector balance sheet looks much better than at any time in recent history. Net worth is currently 750% of disposable income, versus 677% before the pandemic. A big reason is that asset prices, including stocks and real estate, have gone up over the last four years. At the same time, liabilities as a percent of disposable income have remained steady around 100%. That’s a lot less than what household liabilities looked like on the eve of the financial crisis.



6. Stimulus checks were mostly used to reduce debt and increase savings
It’s a common belief that it was the stimulus checks that drove spending. That was actually true only for the first round of checks in the CARES Act, during the depths of the pandemic crisis in 2020. The second and third round of checks were mostly used to pay down debt or used to increase savings. Only about 20% of the second and third round of checks were used for spending. This is a big reason why households have a lot more savings and relatively stable debt despite high inflation.



7. Debt as a percent of total assets has fallen across the income distribution
One valid knock against the above data is that most of the savings accrued to more wealthy households. However, the Fed’s recent Survey of Consumer Finances, which is considered the “gold standard” of data related to consumer finances, showed that the “leverage ratio” has fallen across all quintiles of income since the pandemic. The leverage ratio is debt as a percent of total assets. In fact, the drop in the leverage ratio is relatively larger for lower income households.

• Less than 20th percentile of income: 11.9% (13.6% in 2019)
• 20th – 40th percentile: 18.3% (23.1%)
• 40th to 60th percentile: 17.5% (24.5%)
• 60th to 80th percentile: 20.1% (22.6%)
• 80th to 90th percentile: 14.4% (18.8%)
• 90th to 100th percentile: 6.2% (7.0%)

8. Home price appreciation is a big boost to household net worth across the wealth spectrum
An overwhelming majority of consumption is from the upper 80 percent of consumers by income. In 2022, less than 9% of aggregate spending was by consumers in the bottom 20th percentile of income.

Families above the 25th percentile of wealth not only reduced liabilities (as a percent of income), but their asset values have also surged over the last four years – thanks to surging stock prices and home prices. For families in the middle 20th-60th percentile of net worth especially, the home is the biggest asset and those prices have surged. While they may not want to sell immediately (to avoid taking on a higher mortgage), this is still a massive contrast to what we saw after the Financial Crisis. Back then, stock prices and home prices crashed but only stocks recovered fairly quickly. It took close to a decade for home prices to recover, and so households had to shore up their balance sheets. They did this by saving more, and so consumption was on the weaker side over the past decade.



9. Disposable income and employee compensation growth are running ahead of inflation
As I pointed out above, stimulus checks haven’t driven spending since the first round of checks. Instead, spending has been driven by incomes. In 2022, as inflation surged, households saved less to maintain their level of spending. The fact that they were less leveraged helped, not to mention the fact that their net worth was higher.

The good news is that inflation is pulling back now, and both disposable income and overall employee compensation are running ahead inflation. This is why consumption continues to run above trend, even as the savings rate starts to creep higher.



10. The most important point is that the labor market remains strong
Ultimately, to keep a pulse on the consumer, nothing really beats labor market indicators. The labor market is the entire ballgame as far as the consumer is concerned. And if the labor market deteriorates, incomes fall, consumption falls, and the economy is in trouble.

The best indicator is probably the unemployment rate, which has increased from 3.4% to 3.9%. However, that may be because more people are coming into the labor force. Labor force expansion is not what you associate with a deteriorating economy. Ryan Detrick, Chief Market Strategist and I discussed all this with former Fed economist Claudia Sahm on a recent Facts vs Feelings episode. Seriously, if you’re concerned about the labor market, I recommend listening to it right away (link).

Historically, weekly unemployment claims have been a leading indicator for labor markets. Initial claims for benefits tell you whether layoffs are increasing, while continuing claims for benefits tell you how hard it is for laid off workers to find jobs.

Seasonal adjustments due to pandemic-related distortions have been a big problem with claims data lately. To get around this, I compare non-seasonally adjusted data for 2023 to corresponding weekly data in 2022 and the 2018-2019 average. The top panel in the chart below shows that initial claims continue to run low. They’re comparable to what we saw in 2022 and in 2018-2019, indicating companies are not laying off too many workers.

The bottom panel shows continuing claims for benefits normalized by the size of the labor force – this is the “insured unemployment rate.” You can see that it’s about 1% now, and slightly higher than in 2022, which means hiring has eased and workers are finding it a little harder to find jobs. Yet, it’s running close to where it was in 2018-2019, indicating that this is a still a strong labor market.



Ultimately, the labor market is what matters for the economy and right now, it’s looking healthy. That’s the big picture.

 

"big" Drops in Treasury Yields
Wed, Dec 6, 2023

Relative to where they were just over a month ago, Treasury yields are down sharply as bond prices have rallied. Earlier today, we posted on X that the iShares 20+ Year Treasury ETF (TLT) has nearly fully erased what was a 14% YTD decline as of 10/19 on a total return basis. The Treasury rally can also be seen loud and clear in the chart of the 10-year yield below where yields have gone from just over 5% to just over 4.1%.



Although yields are down sharply, the current decline in yield for the 10-year still doesn't rank as the largest since the Fed first started hinting at higher rates in late 2021. In both August 2022 and April 2023, the 10-year yield experienced a drawdown of more than 90 bps, although neither of those declines in yield reached triple digits (one full percentage point). For this current rally in Treasuries to translate into the largest decline of the current cycle for the 10-year, it would need to fall to 4.05%, or seven basis points (bps) from current levels.

 

Things You Don’t See in A Recession


“There are no gains, without pains.” – Benjamin Franklin

Incredibly, many strategists and economists continue to say we are headed for a bear market and a recession in ’24. That’s right, it is Outlook season and some of the forecasts for ’24 have been quite dour. The good news is we’ve been hearing this from the same crowd for well over a year now and things continue to chug right along. Also, I want to make sure you read the amazing blog Sonu Varghese, VP, Global Macro Strategist did yesterday on the consumer. In fact, a few things I discuss today he covered there as well, but his blog is simply amazing.

Here’s a list of things you usually don’t see in a recession.

Stocks at All-Time Highs
Stocks lead the economy. It works on the way up and the way down. We have various indexes closing in on new all-time highs, but one of the most important indexes in the world is already at new highs. That’s right, the Dow (on a total return basis) just made a new all-time high. To us, this is the market’s way of saying the economy likely will be much stronger next year.



People Traveling and Spending, a Lot
The Sunday after Thanksgiving saw a record number of travelers according to the TSA. In fact, 2.9 million travelers passed through airports. Even more impressive is more than 90% of all flights were on time. It is hard to think consumers are pulling back on spending and worried about the economy starting to slip when they are traveling like never before.



But consumers aren’t just buying airplane tickets, they are spending on many other things. People might complain about things, but that isn’t stopping them from taking that trip, driving their new $80,000 SUV, or updating their house. Here’s a nice chart that shows consumption is still running above the pre-COVID trend. That doesn’t look like a recession to me.



Consumers Are in Much Better Shape Than the Media Claims
All we hear about is how bad the consumer is doing and they will be tapped out soon. Fortunately, if you take the time to look at the actual data that isn’t the case. Would you believe real incomes are at an all-time high? Given consumers make up close to 70% of the economy, this bodes well for continued spending.



We hear every day that things cost more and this is absolutely true, most products and services cost more than they did a few years ago (in many cases, a lot more). But what we rarely hear about is incomes are up a lot too, in fact, more in most cases. Even if prices might be higher, here’s a great table that shows that most people are making more over the past few years as well.



Manufacturing Is Much Better Than the Headlines
We continue to see manufacturing surveys tell one story, while the hard data tells a much different story. It is so impressive how strong parts of manufacturing have been, with real manufacturing construction at an all-time high and up more than 100% (on an inflation adjusted basis) the past three years and high tech construction spending soaring, up more than 900% the past three years.



Yes, a good deal of this is due to the CHIPS Act and other fiscal policy decisions, but that doesn’t mean it has to be bad or can’t work. Just imagine what productivity might do over the coming years as the benefits for all this manufacturing construction is felt. We think this is a huge story going into the future and this isn’t something you’d expect to see if a recession was near.

Lastly, let’s say the consumer slows some in ’24. We could see a scenario where manufacturing improves significantly next year, along with a big bounce in housing should rates pull back. Clearly housing has been a headwind to economic growth and manufacturing overall hasn’t added to growth much. Strength in these areas could potentially help offset any mild slowdown from consumers.



Consumer Balance Sheets Appear to Be the Best They’ve Ever Been
This take will upset many people, but balance sheets for households are much better than they were before the pandemic in many cases and very well could be in the best shape ever. Yes, debt is higher in places, but what is conveniently left out is net wealth. The improvement in housing prices has quietly created enormous wealth, while stocks have had a tremendous run as well. If someone owned a house and some stocks the past few years, they’ve likely substantially increased their overall net worth.

Here’s a great table that shows just that. Assets are as high as they’ve ever been, while liabilities are near the same levels they’ve been for decades. We broke this down as a percent of disposable income to keep it consistent, but it tells a story you won’t hear on the nightly news and likely says no recession is coming in ’24.

 

December Almanac: Stronger in Pre-Election Years

December is the number three S&P 500 and Dow Jones Industrials month since 1950, averaging gains of 1.4% and 1.5% respectively. It’s the second-best Russell 2000 (since 1979) month and third best for NASDAQ (since 1971). It is also the third best month for Russell 1000 (since 1979). In 2018, DJIA suffered its worst December performance since 1931 and its fourth worst December going all the way back to 1901.

However, the market rarely falls precipitously in December and a repeat of 2018 does not seem highly likely this year. When December is down it is usually a turning point in the market—near a top or bottom. If the market has experienced fantastic gains leading up to December, stocks have pulled back in the first half of the month.

In pre-election years, December’s overall ranking remains about the same across the board however, average gains improve handsomely. DJIA averages 2.7%, S&P 500 2.9%, NASDAQ 4.2%, Russell 1000 2.9%, and Russell 2000 3.0%. DJIA has advanced in 14 of the last 18 pre-election year Decembers. DJIA’s worst pre-election December was in 2015 when it declined a modest 1.7%. DJIA’s best pre-election year December was in 1991, up 9.5%.

NASDAQ’s pre-election year December track record is somewhat mixed, up 7 and down 6. An 11.29% advance in 1991 and a whopping 22.0% in 1999 drive its average performance to 4.2%. Like DJIA, NASDAQ’s poorest pre-election year December was in 1983, off 2.5%.

 

Some More Good News for Bulls


“Never bet on the end of the world. It never ends, and if it does, who will you settle the trade with?”

-Art Cashin, Managing Director at UBS

After one of the best months in history last month, the good news is we still see potentially bullish times coming. Here are a few things that caught my eye recently that could have bulls smiling.

The S&P 500 added an incredible 8.9% last month, which was the 18th best month ever (since 1950). Here are the previous top 20 months ever and what happened next. The good news is higher a year later 80% of the time and up another 13.3% on average could have a lot of bulls smiling in 12 months.



Here’s another way to look at large monthly gains. We found the S&P 500 gained at least 8% a total of 30 other times in history and stocks were higher a year later 90% of the time and up 15.8% on average. Once again, this signals the strength we just say was likely the beginning to more strength, not the end.



The S&P 500 hasn’t hit an all-time high since January 2, 2022 – nearly two full years! Here’s the good news, the S&P 500 is about 5% away from new highs and we expect new highs to hit sometime early next year. But what investors need to know is previous times stocks went at least one full year without new highs and then hit one, the future returns were very solid. In fact, stocks were up 13 out of 14 times a year later and up 14.9% on average after long streaks without a new high and then finally making one.



Lastly, we’ve heard time and time again that only seven stocks were going up. We disagreed with that, but there is no question that some of the largest tech and communications names have been spectacular this year. Well, times are a-changing, as we are now seeing this bull market broaden out, as many other groups are beginning to outperform.

Last week, we saw a very rare breadth thrust, which suggested many stocks were surging, which tends to be a signal of impending strength. In fact, more than 60% of all components in the S&P 500 hit a new 20-day high last Friday. This is extremely rare and showed a lot of buying has taken place recently, not just in a few large stocks like they keep telling us. Looking into the data we found that the S&P 500 was higher a year later 15 out of 15 times and up 18.0% on average after previous signals. Wow.



Any one of these signals by themselves could be argued to be random, but when you start stacking them all on top of each other, we continue to expect stocks to do quite well and we remain overweight equities (where we’ve been for a full year now).

 

Seasonal Surge in Claims
Thu, Dec 7, 2023

This morning's release of Jobless claims came right in line with estimates of 220K and is only marginally higher than last week's upwardly revised number of 219K. On a four-week moving average basis, claims have totaled 220.75K, matching the level from three weeks ago.



As we noted last week, before seasonal adjustment, claims usually increase throughout the final months of the year, but the Thanksgiving holiday likely caused an unusual drop off in claims last week. Claims were back up this week with an increase to 293.5K which is the highest level since the start of the year. Versus comparable weeks of the year, that is the highest reading since 2018.



Over the past few months, continuing claims have more consistently been grinding higher with last week marking the highest level in two years. The latest reading showed a modest pivot lower in continuing claims down to 1.861 million and matches the April high of 1.861 million.

 

December’s Quarterly Options Expiration Week Historically Bullish

December’s quarterly options expiration week and the week after have the most bullish record of all quarterly option expirations (page 108, Stock Trader’s Almanac 2023 & 2024 Almanac). Since 1982, DJIA has advanced 30 times during December’s options expiration week with an average gain of 0.46%. In the following week, DJIA advanced 75.6% of the time with an average gain of 0.80%. S&P 500 has a similar, although slightly softer record.

However, the record is not pristine. In 2021, accelerating inflation metrics triggered concerns that the Fed was behind the curve with monetary policy and last year there was a growing concern the Fed was going too far, too fast. In 2018, DJIA and S&P 500 suffered their worst weekly loss as the Fed remained hawkish and determined to raise interest rates even as economic growth was slowing and Treasury bond yields were falling. In 2011, Europe’s debt crisis derailed the market. In 2012, the threat of going over the fiscal cliff triggered a nearly 2% loss the week after.

Going into next week, the market’s bullish historical trends will be tested by the Fed, CPI and PPI. The Fed is widely anticipated to hold rates steady, but everyone is still searching for clarity on whether the Fed is done along with any indication as to when rates may be cut. Today’s better than expected November employment report raises the stakes slightly, but the trend employment has been toward softer.

 

If You’re Worried About a Rising Unemployment Rate, Rest Easy for Now


Last month we were talking about a potential deterioration in the labor market, as the unemployment rate rose to 3.9%. It was as low as 3.4% in the Spring. That increase was definitely something to worry about, as a rising unemployment rate usually signals that there’s more to come – which is the essence of what’s captured in the Sahm rule. (Ryan and I talked to the author of that rule, Claudia Sahm, a few weeks ago on Facts vs Feelings for more perspective on that.)

Well, we now have really good news, because the unemployment rate fell back to 3.7% in November, the lowest since July. Of course, that is just one month, but the directional shift is welcome. More importantly, it hides some underlying labor market strength, because it came on the back of more than 500,000 people coming back into the labor force.

In short, more people came back into the labor force, and they found jobs – both of which happen only in a strong, resilient labor market.

Job Growth Is Still Strong, and Layoffs Are Running Low

Payroll growth rose 199,000 in November, above expectations for closer to 180,000 jobs added. There’s been a boost from workers returning after the end of the autoworkers and Hollywood strikes, but that’s why the 3-month average is helpful, and that’s running at 204,000. For perspective, job growth averaged 163,000 a month in 2019. Note that we need about 100,000 – 125,000 net new jobs a month to keep up with population growth.



We also got the comprehensive Job Openings and Labor Turnover Survey (JOLTS) data this week, which showed that layoffs continue to run extremely low. The “layoff rate,” which is layoffs as a percent of the employed workforce, is running at 1.0%, well below the 1.2-1.3% range we saw before the pandemic.

Goldilocks = Strong Wage Growth + Falling Inflation

Wage growth continues to run strong, with average hourly earnings for private workers rising at an annual rate of 3.4% over the last three months. It’s even better for non-managers, whose wage growth is running at 4.2%. These are running slightly above what we saw before the pandemic.



Under normal circumstances, these wage growth numbers would lead the Federal Reserve (Fed) to worry about an economy that’s running too hot. But even they can rest easy since inflation is falling. As I pointed out last week, their preferred inflation metric, the personal consumption expenditures index excluding food and energy, is running at an annual pace of 2.4% over the last three months and 2.5% over the past six months. And the only reason those numbers remain above the Fed’s target of 2% is that the official rental inflation data severely lags the disinflation we’re actually seeing on the ground. So, there’s quite a bit more disinflation to come in the official data.

Beyond the Fed, American households are also catching a break from falling energy prices. Nationwide average gas prices are now below $3.20/gallon, which is the lowest this year (as you can see in the chart below). The good news is that it’s likely to head even lower.



All in all, we have

• Strong employment growth
• Strong wage growth
• Falling inflation

All of which means inflation-adjusted incomes are rising at a pace of 2.5-3.0%.



That’s good for consumption, which means the economy is on a solid footing with a still upbeat outlook for profits.