New job, new firm but the same Free Whelan. I thank you for your continued support. Speaking of support, on the 28th of November I'll be speaking at the Ensombl All Licensee Professional Development Day. Link available here and I look forward to seeing you there.
Good afternoon,
And so, bleary-eyed yet stoic, the nation lurches along the final stretch of the year safe in the knowledge that we really do have the best cricket team in the world.
Source: Glenn Mitchell - X
In more interesting news I start the countdown for my annual Thanksgiving lunch on Sunday and I've now become that person too busy to try a new recipe. I'm going to go ahead and repeat last year's apricot jam glaze but I have a lot to be thankful for and that's what really matters.
Also a few Coors in the sun with the college football on the big screen is a great way to pay respects to the largest economy on earth.
Speaking of Thanksgiving
And speaking of the largest economy on Earth we have full focus on the US consumer, that most precious yet powerful beast. Retail earnings has been...choppy. retail sales were down 0.1% last month, although that was less than the 0.3% expected it's still a fall.
We saw HD report and it wasn't amazing re what people are spending money on.
Source: Courtesy FT
The most important question for ~60% of US GDP (and therefore 15% of global GDP) is "how long does the US consumer keep going?"
From the same FT article...
"Now, though, with the labour market cooling more notably, wage growth moderating, and savings stockpiled since the pandemic beginning to run out, the question dogging officials is how long can the US consumer retain this resilience?"
Here are some notes from the US banks on the subject.
Goldman Sachs' Scott Feiler, consumer sector specialist.
- Notes that retail sales did fall in October. They see a slowdown but not a disaster. The consumer is "stretched" but somewhat resilient.
- Big ticket items (autos and home related goods) are getting hit.
- Services is below covid but catching up and catching up strong.
- RV's and "power sports" (jetskis I guess) will remain challenged.
- Small ticket stuff will remain ok, apparel etc.
- Black Friday is Friday after Thanksgiving. Event based shopping is still strong. Shoulders around those events are not.
- Small ticket electronics.
- XRT has its best month in November.
How does it translate to earnings? Topline is missing by a few per cent but bottom line is still resilient through margin defence.
Helen Zentner- Morgan Stanley Chief US Economist
- Cooling spending (obviously)
- Business investment & equipment will return in back half of 2024
- Existing home sales rise as cuts hit in back half 2024
- Core goods in the CPI will be negative next month
- Fed is done.
"Fed is done..noted"
Ok back to Jimmy James,
What can we pull from this? Firstly, that the US consumer is still doing what it does, just smaller. Walmart said that transactions over $1000 were down 5.2% year on year.
It's all in line with the soft landing thesis now seen as the norm.
Companies are surviving it all fine because although spending is less, companies have been able to keep their margins throughout via lowered input costs and freed up supply chains.
Also note that boomers are carrying the ball with increased spending while "the youngs" have cut back. Similar to Oz.
Bottom line..bullish.
Bullish...noted.
So how about that XRT ETF in the States? It's mostly apparel and does well in November.
It too looks bullish...
Source: TradingView
Happy to participate. Stay long.
All the best and well done to the Aussies.
Thanks,
James
