Analysts keep raising earnings expectations for the S&P 500. The outlook for corporate profits is looking better. Since the last round of earnings started arriving in mid-April, Wall Street analysts have been marking up their expectations for the profits that S&P 500 companies are likely to generate over the next year. It's yet another reason the bulls of the market appear to have the bears on the run. According to FactSet, in aggregate, analysts have upped their estimates by about 3%, to nearly $232 a share for the entire index, from just below $225 a share back when worries about an imminent recession were arguably at their worst. Analysts expect the S&P 500 to deliver another year of record earnings in 2023, with EPS rising roughly 2% to $220.53 by the end of December. The bottom line: That's not huge growth. But it seems to be solid enough to give stocks a firm foundation to climb. It’s also a period that reminds us how important it is to “tune out the noise” and focus on what you can control, like your time horizon, risk tolerance, and goals. So let me know if you need help turning down the bear volume you might be hearing. The 2.5% pullback in the past few days is overdue, given the strength recently. But we do not view this as a local top and rather, we would be buyers of this pullback.

Should you have any questions or concerns, please feel free to reach out.

Portfolio Notes

(+) indicates a positive development, (-) indicates negative, and (~) indicates neutral

(+) Apple (AAPL-US) The App Store turned 15 this week. After growing between 27% and 29% annually since 2019, Apple's App Store now generates $1.1 trillion in billings and sales on a global basis. Fifteen years after its launch in 2008, total sales in the App Store are larger than the annual GDP of all but 16 countries and are larger than the GDP of countries like Saudi Arabia, Turkey, Switzerland, and Taiwan. Owned in Core, US and Opportunity Portfolios.

(-) Accenture (ACN-US) Consulting firm Accenture dipped despite better-than-expected quarterly results. Its adjusted third-quarter earnings per share of $3.19 came on $16.56 billion in revenue. Those topped the $3.01 and $16.49 billion expected. However, its outlook is where things fell apart. Executives lowered their fiscal 2023 revenue growth range from 8%-10% to 8%-9%. They also anticipate current-quarter revenue of $15.75 to $16.35 billion, which trailed the $16.35 billion consensus estimate. They blamed weakness in the tech, media, and communication industries, where revenue fell 8% YoY in the recent quarter. The company’s largest market, North America, also saw revenue growth slow to a three-year low of 2%. Unfortunately, artificial intelligence (AI) won’t give the company a boost anytime soon. Accenture CEO Julie Sweet said she doesn’t expect generative AI to be a significant growth driver next year. Instead, the firm is focused on companies finishing their migrations to the cloud, as there’s so much digital transformation work left to do in the market. Owned in US Portfolio.

(+) Amazon (AMZN-US) jumped higher, erasing losses from Wednesday when the FTC accused it of crafty tactics when enrolling consumers into its Amazon Prime program. The e-commerce giant jumped after JPMorgan Chase reiterated the stock as overweight, noting the opportunity for further growth in Amazon Prime. JPM believes AMZN should maintain its unparalleled pricing power. The analyst estimates international market penetration to increase and believes there are more potential market to expand into. International penetration is only 18-32% vs.85% in the US. We continue to like AMZN for its dominant positions in e-commerce and cloud services, both businesses continue to benefit from secular growth and increasing scale. We would continue to own the name and be buyers at these levels. Owned in Core, US and Opportunity Portfolio.

(~) Alimentation Couche-Tard (ATD-T) said it agreed to acquire a package of European retail assets from TotalEnergies for €3.1B. They will acquire 100% of TotalEnergies retail assets in Germany and the Netherlands, including more than 1,100 service stations in Germany and nearly 400 in the Netherlands. The Canadian company also will acquire as a 60% controlling interest in assets in Belgium and Luxembourg, which the two companies will form a joint venture to operate more than 600 service stations. The transaction is subject to approval by European regulatory authorities, and closing is on track to occur before the end of this year. Owned in Core Portfolio.

(+) Chipotle (CMG-US) is very popular on Wall Street and continues to receive price-target bumps. KeyBanc is the latest Street firm to raise, going to $2,300 from $2,050 and maintaining its buy rating on shares. The analyst cites "tame" costs for chicken and avocado, sustained traffic momentum and pricing power, among other advantages. RBC has a price target of $2,132. Shares are up 47% this year but have been moving sideways for almost two months. Owned in Opportunity and US Portfolios.

(--) Duff & Phelps Utility and Infrastructure Fund (DPG-US) The Board of Directors voted to decrease the quarterly distribution rate from its previous level of $0.35 per share to a new level of $0.21 per share. This represents a decrease in the annual distribution level from $1.40 per share to $0.84 per share. The 40% decrease in the distribution reflects the increase in the Fund's cost of leverage, current and expected earnings, and overall market conditions. The Fund's investment adviser and Board of Directors believe that the new distribution level should be more sustainable over time and thus that the new level is in the long-term interest of shareholders. The market "hated" this news and sold the units down by over 20%. The new $0.84 per share annual distribution rate represents a yield of 6.74%. The Fund will invest at least 80% of its total assets in dividend-paying equity securities of companies in the utility industry and the infrastructure industry. The utility industry is defined to include the following sectors: electric, gas, water, telecommunications, and midstream energy. The infrastructure industry is defined as companies owning or operating essential transportation assets, such as toll roads, bridges, tunnels, airports, seaports, and railroads. Owned in Cash Flow Portfolio.

Weekend Reading

Navigating Early Retirement Although this is a US example it is still interesting. Early retirement is a dream for many Americans. In addition to saving aggressively and investing well, success depends on navigating pitfalls in the tax code. RATIONAL WALK

Every Company in the S&P 500 Visualized The S&P 500 has a market cap of $34 trillion, and it's home to many of the world's most important stocks. Here's how the flagship index breaks down by company and sector. VISUAL CAPITALIST

Wealth: Five Formulas and a Recipe A Blueprint for Flourishing. I asked my friends and readers for the best things they’ve read on how to get wealthy and stay wealthy. WHAT'S IMPORTANT

The Kekulé Problem Where did language come from? Cormac McCarthy writes about why we sometimes know things subconsciously and then figure them out metaphorically. NAUTILUS

To smoothly transition the family business, preparing successors is key According to research by the Family Enterprise Foundation, the charitable foundation of Family Enterprise Canada, which grants the family enterprise advisor designation, offers ideas to prepare the next generation. 3 Great Reports:

PART ONE

PART TWO

PART THREE