Morning Commentary
Yesterday was another seesaw session that saw major indices bounce around in a narrow trading range. Market breadth was slightly negative, but the story was light volume and indecision.
Market Breadth |
NYSE |
NASDAQ |
Advancing |
1,531 |
2,070 |
Declining |
1,817 |
2,579 |
52 Week High |
165 |
205 |
52 Week Low |
44 |
133 |
Up Volume |
1.85B |
2.23B |
Down Volume |
1.61B |
2.68B |
Cautionary Tale: Buy the face cream and joint ointment but hold off on the stock.
Yesterday, another “hot” IPO was taken out on a stretcher. Mattress maker Casper (CSPR) agreed to be acquired by private equity firm Duration Capital at $6.90, which was a 94% premium from Friday’s close. The problem is the stock went public at $12.00 a share after lowering its offering price from $19.00.
That was a red flag, but the biggest red flag should have been the hype centered more on celebrity investors than revenue and earnings.
The financial media fawned over the A-list celebrity investors and endorsers, including Nas, Kylie Jenner, Ashton Kutcher, Leonardo DiCaprio, and Adam Levine.
There were other cautionary tales for folks to pause before applying their celebrity worship to their investing portfolios.
The key is to watch execution. For Casper, it was always awful as the stock was slammed every time the company reported.
Date |
Quarter |
Earnings |
Est. |
Revenue |
Est. |
1-Week |
1-Day |
8/11/20 |
Q220 |
-$0.61 |
-$0.76 |
$110.2M |
$104.75M |
-12.8% |
-6.2% |
11/16/20 |
Q320 |
-$0.40 |
-$0.33 |
$123.5M |
$145.91M |
-17.6% |
-13.6% |
2/24/21 |
Q420 |
-$0.37 |
-$0.35 |
$150.3M |
$137.91M |
-4.1% |
-3.2% |
5/13/21 |
Q121 |
-$0.52 |
-$0.55 |
$127.7M |
$124.5M |
-1.8% |
-4.5% |
8/10/21 |
Q221 |
-$0.81 |
-$0.34 |
$151.8M |
$151.28M |
-25.9% |
-16.8% |
I’m not thrilled at how influential the top five stocks have become in this market. This is why we don’t “play” the market and urge everyone to focus on individual names in an active portfolio where they have some oversight.
BNPL
For a non-trivial share of adults, cash, credit and debit aren’t the only preferred payment methods for holiday shopping. Up to 23% of consumers plan to use other payment methods (most often used) for holiday purchases, such as layaway, gift cards, or prepaid debit cards. And 5% of adults plan to use Buy Now, Pay Later (BNPL) to cover most of their large gift purchases this year — the highest share across any category. A much higher share, however, plans to use BNPL to make at least some purchases.
One in 5 adults plan to use BNPL this holiday season, and another 16% are undecided.
Millennials, at 38%, took the lead in planned usage of BNPL for holiday purchases. And while 21% of Gen Z adults say they are planning to use BNPL this holiday season, over 25% of Gen Z adults are still undecided on how they’ll pay.
Portfolio Approach
Yesterday, we took profits in Industrial and Materials and add a new position in Materials in our Hotline Model Portfolio.
Today’s Session
Retail Sales
Regardless of method, consumers were shopping in October. US retail sales climbed 1.7% in October from September, which was revised higher to 0.8%. The street was looking for +1.4%. Internet sales surged +4%, which is a record monthly increase.
The numbers were solid – even going back to 2019.
October Monthly Sales Retail & Food Services |
M/M |
Y/Y |
2019 |
Headline |
+1.7 |
+16.3 |
+22.5 |
Motor Vehicle & Parts |
+1.8 |
+11.5 |
+21.6 |
Furniture |
+0.4 |
+11.9 |
+20.1 |
Electronics |
+3.8 |
+18.4 |
+13.1 |
Building Materials |
+2.8 |
+10.2 |
+30.0 |
Food & Beverage (at home) |
+0.9 |
+8.3 |
+18.8 |
Health & Personal Care |
-0.6 |
+7.4 |
+11.8 |
Gas Stations |
+3.9 |
+46.8 |
+24.8 |
Clothing |
-0.7 |
+25.8 |
+16.6 |
Sporting Goods |
+1.5 |
+17.6 |
+37.9 |
General Merchandise |
+0.8 |
+15.9 |
+21.4 |
Department Store |
+2.2 |
+27.6 |
+32.0 |
Internet |
+4.0 |
+10.2 |
+40.4 |
Food & Beverage (away from home) |
+0.0 |
+29.3 |
+10.4 |
Tweet |
3/28/2024 1:39 PM | Fruitful Quarter |
3/28/2024 9:50 AM | LISTEN TO THE MARKET |
3/27/2024 1:40 PM | Mostly Higher |
3/27/2024 9:32 AM | U-TURN? |
3/26/2024 1:08 PM | Everything Is Up |
3/26/2024 9:42 AM | TAPPED OUT (I HOPE YOU AT LEAST GOT A T-SHIRT) |
3/25/2024 1:33 PM | Not A Mutiny |
3/25/2024 9:35 AM | STAYING THE COURSE…BEYOND TECH |
3/22/2024 12:56 PM | Toll on Americans |
3/22/2024 9:38 AM | A TAD TIRED |
3/21/2024 1:55 PM | Building on Gains |
3/21/2024 9:30 AM | A COMFORTING FED |
3/20/2024 1:33 PM | Pivotal Moment |
3/20/2024 10:00 AM | HERE COMES THE FED |
3/19/2024 1:33 PM | Picking Up Steam |
3/19/2024 9:35 AM | RUMBLINGS IN THE BOND MARKET |
3/18/2024 1:48 PM | Mag 7 is Back |
3/18/2024 9:39 AM | THE PARTY IN SAN JOSE WILL BE LIT |
3/15/2024 1:38 PM | Realtors Settle |
3/15/2024 9:33 AM | AN UNEASY PAUSE |
3/14/2024 1:43 PM | Sticky Inflation |
3/14/2024 9:48 AM | GOING TO A GO-GO |
3/13/2024 2:16 PM | Taking a Breather |
3/13/2024 9:51 AM | ALL SO EPIC |
3/12/2024 1:42 PM | Marching Higher |
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