After the Fed’s previous decision not to hike rates, stock market has been on an up streak and once again despite the poor economic data coming through, US stocks are looking at close to an all-time highs again. Some of the recent data that were released were consumer spending and job numbers. Below are some key points…
- Stock Market Performance:
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- The stock market had an impressive run but recently faced challenges due to lower consumer demand, retail sales and a pullback in tech.
- Target reported lower sales but improved margins.
- Home Depot, Macy’s, and the tech sector experienced positive momentum before the release of the recent data.
- Most of these cards offer zero percent interest till 2025. (I wish they had that in my college years).
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- Consumer Spending Challenges:
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- There are concerns about high consumer debt and unsatisfactory job data affecting consumer spending.
- Headlines suggest that families are expected to spend less on Turkey Day, possibly due to inflation and the burden of shopping for both food and discretionary items.
- Black Friday Outlook:
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- Despite challenges, there’s optimism about Black Friday sales, especially for retailers offering massive discounts.
- Credit card offers, including ones with no interest until 2025, might attract consumers and contribute to Black Friday sales. This is the reason I like Mastercard, Visa, and AMEX, while AMEX membership base fee model roughly 1/3 of their revenue comes from interest payments.
- Investment Strategy:
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- The strategy involves betting on lower-priced items, particularly those on significant sales.
- In addition to low-priced consumer retailers, I would continue to focus on tech stocks with AI, such as Microsoft. The recent news about their new hire drove the stock higher and today we look to NVIDIA’s earnings.
- NVIDIA and AI:
Those of my generation remember playing computer games (desktop) and NVIDIA used to make graphic cards from VGA and to evolved now to even making self-driving technology. The company probably has many other weapons in their trunk. They’ve been around forever and before today analysts were predicting NVIDIA may become the biggest in market cap in NASDAQ.
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- NVIDIA was down all day during today as investors were waiting for their 3Q earnings. It was well expected by the market that they would beat consensus estimates but the question is by how much? Results were stellar. They beat from top to bottom. What ruined party was that the CEO guided lower 4Q mostly because of sales impacted by China. China is a big portion of NVIDIA’s business. That said, we’re not even through Thanksgiving or Christmas yet. He also mentioned that Microsoft’s AI expansion may not be as impactful as everyone thinks to NVIDIA (Talk about lowering people’s self-esteem). While NVIDA fell despite putting up good 3Q numbers, I expect a bounce back. Most street analysts are likely to put out reports tomorrow morning on how great 3Q was and raise their TP. So typical of Wall Street.
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- Amazon and PDD are also mentioned in the consumer space, preparing for the Christmas season. PDD is my new favorite in this online space.
- Key Economic Data:
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- The Producer Price Index (PPI) for final demand fell 0.5% in October, marking the largest monthly decline since April 2020.
- The Consumer Price Index (CPI) climbed 3.2% year over year in October, a slower pace than the rates recorded in September and August.
- Santa Claus Rally Expectation:
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- Despite current economic challenges, there is anticipation of a “Santa Claus Rally” in the market. Plenty of credit card offers and earnings for most companies were solid. The focus on Black Friday sales and credit card offers suggests an optimistic outlook for certain sectors despite the overall economic uncertainties.
