Bargain hunting
Inflation headwinds, higher interest rates, waning savings, and the resumption of student loan payments aren’t deterring Americans from going shopping this year. In fact, they might be encouraging them to do so, with everyone trying to spot a good deal in the current environment. An estimated 182M people across the country are planning to shop in-store and online from Thanksgiving Day through Cyber Monday, according to the National Retail Federation, which is 15.7M more people than last year and the highest estimate since NRF began tracking the data in 2017.
Snapshot: Black Friday continues to be the most popular day to scout out deals, with 72% (130.7M people) planning to shop, up from 69% in 2022. The numbers highlight the resilience of the American consumer, who is expected to spend an average of $875 on gifts, decorations, food and other key seasonal items over the winter holidays. To meet the demand of the season, NRF expects retailers will hire between 345,000 and 450,000 seasonal workers, in line with 391,000 seasonal hires of 2022.
The investing side of retail has also been a mixed bag this year. The S&P 500 Consumer Discretionary Index (SP500-25) has soared 33% YTD, led by names like Amazon (AMZN), Chipotle (CMG), Expedia (EXPE) and Royal Caribbean (RCL), while the S&P 500 Consumer Staples Index (SP500-30) has declined about 5%, weighed down by Conagra Brands (CAG), Dollar General (DG), Tyson Foods (TSN) and Walgreens (WBA). Divergence could also be seen throughout the retail sector last week, with shares of Target (TGT) soaring about 18% following its Q3 earnings report, while Walmart (WMT) dove 8% after striking a cautious tone on consumer spending.
Black Friday schedule: The stock market will shut early at 1 PM today, bond markets will close an hour later, while metals and U.S. crude oil will settle at 12:30 PM and 1:30 PM, respectively. Some history… Back in 1992, the major U.S. exchange operators called for a 2 PM ET for the Friday after Thanksgiving, two hours earlier than the regular close at 4 PM. The following year, the NYSE and Nasdaq chose to shutter markets at 1 PM, a schedule that is currently observed.
Heard in Europe
The Netherlands has shifted to the right with populist Geert Wilders’ Freedom Party’s massive win in the Dutch elections, putting him in the lead to become the next prime minister. Wilders still needs to form a coalition government, and so outgoing Prime Minister Mark Rutte will remain in a caretaker role till then. “The formation of the coalition is likely to take a very long time,” said ING. Wilders, referred to as the Dutch Trump, is known for his anti-immigration stance and calls for “de-Islamization” of the Netherlands. He also advocated for a referendum on leaving the EU, although he favors a Norway model, with full access to the single market. Apart from a major influx of migrants, Netherlands is also facing a cost-of-living crisis, with its economy in a technical recession. (5 comments)
Carbon con
Oil and gas producers need to abandon the “illusion that large amounts of carbon capture” will help solve climate change, and must instead spend more on clean energy, the International Energy Agency said ahead of the COP28 climate summit. “Producers looking to align with the Paris Agreement would need to put 50% of their capital expenditures towards clean energy projects by 2030,” the IEA warned, noting that they invested just 2.5% of their capex in clean energy in 2022. Oil giants such as Exxon Mobil (XOM) and Chevron (CVX) have been investing billions in carbon capture, while Shell (SHEL) and BP (BP) have taken a different approach. In other news, OPEC+ postponed its meeting from Sunday to Thursday, dragging oil prices given the uncertainty over further supply cuts. (4 comments)
Risk to humanity?
OpenAI researchers in a letter had warned the board of a powerful AI discovery that could potentially threaten humanity, which was likely a factor in CEO Sam Altman’s ouster. The breakthrough relates to a new Q* AI model that could solve certain mathematical problems, although at grade-school level. But it still indicates that the model could have greater reasoning capabilities, because of which researchers flagged its potential danger. After Altman was fired, he jumped ship to OpenAI backer Microsoft (MSFT). However, he returned to OpenAI after over 700 employees threatened to quit. Regardless of all the drama, Investing Group Leader The Value Portfolio believes Microsoft is a leader not just in AI, but also in commercializing AI. (120 comments)
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