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12/6/2023 10:37:11 AM Eastern Time

MAG SEVEN SAVES THE DAY (AGAIN)
By Charles Payne, CEO & Principal Analyst

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Tuesday was an ugly session. There wasn’t any sense of panic, but there wasn’t any sense of life. Look at the red on the Heat Map. Ouch.

And yet, growth sectors also pulled the overall S&P 500 into the plus column. Are we sure we want to move on to other sectors?  When the mega-cap rally is finally over, we may miss it dearly.

Between that faithful moment, large-cap tech shouldn’t be underestimated. In the most recent week, $12.7 billion poured into the category. On the other end, $4.0 billion came out of government bonds. 

Perhaps the rotation that will be most impactful won’t be large-caps into small-caps, but bonds and money market funds.

No other sector has gotten any of the fresh cash that’s flowed into the market this year.

The NASDAQ Composite continued its 2023 dominance and talk of its demise.

Although the NASDAQ enjoyed a nice gain, the internals are tough. Decliners swamped advancers, and the down volume doubled the up volume. But there were more 52 highs than lows.

Portfolio Approach

We added a new Technology position in the Hotline model portfolio.

Today’s Session

The focus on the economy intensifies as we get closer to the jobs report on Friday.

Yesterday, Car-Mart (CRMT) posted its financial results that saw revenue up slightly, 2.8%, but retail units down 4.6%.  There were serious red flags:

• Net charge offs
• Allowance for credit loss
• Loss per share

Shares Skid

The stock got creamed, finishing the session down 18%, and during the session shares were off 26%.

The company has 154 locations in Alabama, Arkansas, Georgia, Illinois, Indiana, Iowa, Kentucky, Mississippi, Missouri, Oklahoma, Tennessee, and Texas.

Could this just be a poorly run company or just another harbinger for the direction of the entire economy?

Total auto inventories are above the 5-year average for the first time since august 2019.

3Q2023 Productivity

Revised labor productivity now stands at 5.2% from 2.4% a year ago.

Productivity is the secret sauce for an economy that provides healthy wages but can also keep the Fed at bay.

The question is how much of today’s number comes at the expense of unit labor costs.

ADP

Goods

• Natural resources and mining up 5,000
• Construction down 4,000
• Manufacturing down 15,000

Services

• Trade, transportation, and utilities up 55,000
• Information up 4,000
• Financial activities up 11,000
• Professional and business services down 5,000
• Education and health services up 44,000
• Leisure and hospitality down 7,000
• Other services up 15,000

Reactions

Major equity indices edged higher on this morning’s release and the ten-year yield moved lower. I still think the true buy signal happens with a yield below 4.0%.

Long Idea: GoDaddy Inc. (GDDY) @ $104.27
Industry: Technology; Information Tech Svcs
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BACKGROUND: GoDaddy Inc. engages in the design and development of cloud-based products in the United States and internationally. It operates through two segments: Applications and Commerce and Core Platform. The Applications and Commerce segment provides applications products, including Websites + Marketing, a mobile-optimized online tool that enables customers to build websites and e-commerce enabled online stores; and Managed WordPress, a streamlined and optimized hosting platform that allows customers to build and manage a faster and more secure WordPress site and offered with WooCommerce to sell online; and marketing tools and services, such as GoDaddy Studio mobile application, search engine optimization, Meta and Google My Business listings, and email and social media marketing designed to help businesses acquire and engage customers and create content. The segment also offers connected commerce comprising Smart Terminal, a dual screen all-in-one Point-of-Sale system that allows customers to manage in-store inventory and product catalogs and take payments; GoDaddy Payments, a payment facilitator that enables customers to accept all major forms of payments; and email service plans with a multi-feature web interface, and Microsoft Office 365 accounts that connects to customers' domains. The Core Platform segment offers domain products, including primary registrations, domain aftermarket platform, and domain name add-ons, as well as GoDaddy Registry, a provider of domain name registr

SKINNY: GDDY has a competitive advantage in a fragmented market. The company has been increasing operating margins and higher revenue per user, benefits from AI implementation. Fundamentals have improved and estimates are trending up. Our target is $125.