I hate holiday shopping!
Like, seriously… I’d rather stand in the freezing rain… watch paint dry… swim in shark-infested water… (you get the point).
But apparently there are a lot of people who feel very differently. In fact, this year the National Retail Federation expects shoppers to spend record amounts of money. And that’s going to take hard work given the “everything shortage” the economy is currently dealing with.
Today, households are flush with cash thanks to rising wages and government stimulus payments. And that cash will make a big difference for retailers who are still working to recover from last year’s coronavirus-cooled holiday shopping season.
Over the next few weeks, retailers will be giving investors hints about everything from supply chain bottlenecks, to store traffic and even discount levels. (Don’t expect to see too many discounts though… demand is way too strong.)
Investors can use these clues to pick out the winners and losers in this holiday season. And that gives you a chance to lock in profits from companies who are prepared to profit from this window of opportunity.
Today’s links include record spending and payment scandals, record low oil inventories, and record inflation for veggies! (my kids aren’t disappointed about that one.)
Holiday Spending, Visa and Inflation
- Reuters: US holiday sales to hit record $800 billion.
- National Retail Federation expects sales to increase between 8.5% and 10.5%.
- Driven by rising income and strong household savings.
- Arrival of international travelers should also boost retail sales.
- WSJ: DOJ investigating Visa’s relationships with Square, PayPal.
- Antitrust investigators looking into incentives Visa gave.
- They’re also looking at a deal Visa struck with Cash App.
- CoreLogic: Home price inflation holds at 18.6% rate.
- Phoenix had the strongest price increase, up 33.3% year over year.
- In August, national home prices were 46% higher than previous peak.
- Demand for homes is robust with elevated demand from investors.
- Bloomberg: China’s inflation drives spinach prices up 157%
- The “everything shortage” drove wholesale veggie prices up 28%.
- Expected low temperatures will reduce crops and stoke inflation.
Metaverse & Crypto: Will Facebook Get a New Name?
- WSJ: Zuckerberg to sketch out Facebook’s metaverse vision
- FB is investing heavily in “shared online spaces.”
- Facebook Reality Labs will become a separate reporting unit.
- Facebook is considering rebranding – could announce new name.
- CoinDesk: Bitcoin dips as enthusiasm fades.
- Bitcoin pulled back sharply Wednesday after posting high near $66,900.
- Estimated Bitcoin leverage ratio at highest level since September.
- CoinDesk: BITO performance has lagged Bitcoin
- BITO shares down 2.45% according to Grayscale while Bitcoin dropped 1%.
- GBTC price is currently at 17% discount to market price of underlying Bitcoin.
- Varying opinions on when (if??) a spot-based Bitcoin ETF will be approved.
- WSJ: Crypto investors are learning about contango
- Bitcoin futures are merely side bets on the price of Bitcoin.
- ETFs have some advantages but also drawbacks compared to actual Bitcoin.
Taxes, Savings & Government Spending
- WSJ: Biden framework on social spending, climate package.
- Framework for $1.75 trillion spending package hopes to win support.
- Includes 1-year extension of expanded child tax credit.
- Funds 6 years of pre-K childcare subsidies.
- WSJ: How the billionaire Income tax would work.
- Proposal for “income” tax on 700 billionaires’ unsold publicly traded assets.
- Would eliminate ability for billionaires to defer capital gains taxes.
- Would apply to those with net worth of $1 billion or income of $100 million.
- LendingTree: 17.5 million Americans leaving retirement money on the table.
- 17% of employees don’t contribute to retirement plans.
- 12% of employees leave matching funds on the table.
- Affordability is the main reason American’s aren’t contributing.
Earnings Season Rolls On
- WSJ: Caterpillar profits double thanks to construction
- CAT customers placed new orders. As a result, revenue increased by 14% .
- Earnings per share of $2.66 versus expectations of $2.31.
- Construction sales up 30% and mining sales grew by 32%.
- Bloomberg: HOOD misses estimates, sinks below IPO price.
- Crypto transaction revenue was down 78% from Q2.
- Meme stock activity slumped. This led to a slowdown in activity.
- Robinhood says slow trading may continue through end of the year.
- Reuters: UPS results get boost from higher shipping prices.
- Profits beat expectations because of strong e-commerce demand & pricing.
- UPS raised profit margin expectations.
- The company’s high-paid union labor force has less turnover.