Off to the Races - Market Update Aug 19-23, 2024
Watch the Stare DOWN
Scheduling note for the next two weeks. I will not be releasing a Market Update nor a Money Mentality next week.
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Welcome back to the Rambling Mind Newsletter. This is your Market Update.
Summary of Topics:
Economic News
😨Labor Market is Much Worse Than Thought
Company News
😮Retail Surprise Earnings
Stats of the Week
🎰For Every $1 Bet Placed, $2 less is invested
🪙Bar of Gold Worth $1 Million
🏡1 in 10 Homes are Worth $1 Million
🛤️Rail strike costs Canada $250 million/day
🏘️Home Sales increased by 1.3% in July
Looking Ahead
📉Personal Consumption Expenditure (PCE) released on Friday
💹Earnings
CrowdStrike (was my largest holding) reports Wednesday
Nvidia (carrying the market) reports on Wednesday
Sports I Love
💔NOT AGAIN I hate MAN U
🏈College Football is BACK
🏈NFL Returns next week
Extras
🏦Y’all Street?
Markets
Jerome said the magic words and the Stock Market took off like Sha'Carri Richardson in that home stretch of the 4x100.
Those words were, "The time has come for policy to adjust. The direction of travel is clear, and the timing and pace of rate cuts will depend on incoming data, the evolving outlook, and the balance of risks.”
In Layman's Terms: Dem rates are being cut in September and continuously after that depending on how the economy reacts.
Investors said, "Thank you" and double-fisted stocks of all kinds. Now all of a sudden, the S&P 500 is about to make new highs again. Remember two weeks ago when everyone was losing their minds? No? Me either. Keep a cool head and keep buying. We GETTING RICH, SLOWLY!
Tale of the Tape
Economy
Folks searching for jobs have been trying to tell us but we ain't wanna listen. The Bureau of Labor Statistics finally gave them all the proof they needed.
🔢By the Numbers: The BLS revised the total number of jobs added to the economy so far this year by wait for it … 818,000 jobs. It is the largest downward revision since 2019.
BLS said rather than adding 242,000 jobs per month. We only added 173,500 jobs per month this year.
This means unemployment has been above 4% for much longer than expected.
Leisure and Hospitality had a revision of -150,000 jobs
Profession and Business services had a revision of -358,000 jobs
〰️Takeaway: The supposed labor resilience the Fed (and I) have been so proud of was all a mirage. It is now guaranteed that Jerome will be cutting rates in September.
Final Takeaway: According to a survey by the NY Federal Reserve, 4.4% of people believe they will lose their jobs in the next 4 months. This is the highest percentage since 2014. This has caused a huge spike in people actively searching for a new job.
Companies
😮🛍️Retailers Surprise Upside
Last week TJ Maxx, Target, Ross, Home Depot, Lowe's, and Macy's reported earnings. There was a common trend in all the earnings reports.
If it ain't cheap, people ain't buying.
📈Stock Move After Earnings: Target jumped 13%. TJ Maxx rose 6%. Ross rose 4%
Macy's dropped 13%
Home Depot and Lowe's were essentially flat.
🔢By The Numbers: Target has been in the dumps for the last year due to falling sales. However, they reported a sales increase of 2% this quarter, and profits increased by 36%. They reported a reduction in prices on 5,000 items.
TJ Maxx and Ross saw revenues increase by 6% and 8% respectively. Both stores also raised their expectation for the year
As your wife, sister, mom, and girlfriend would tell you. These are bargain-hunting paradises.
Home Depot, Macy's, and Lowe's reported declines in revenue as homeowners pull back on expensive DIY projects. And Macy's is well Macy's, too freaking expensive.
👀What to Watch: How far can consumers force businesses to keep dropping prices?
Stats of the Week
According to a working paper, for every $1 placed on sports betting. US households invest $2 less. People are trying to win BIG and are moving their money out of sound investment strategies.
Since sports betting was allowed in 2018, 38 states have legalized it. In January of this year, Americans spent $14 Billion on sports betting. In January 2019, only $1.1 Billion was spent.
For the first time in history, a gold bar is worth $1 Million. A bar is about 400 ounces. An ounce of gold is about $2500 after a major run-up this year in anticipation of the Fed cutting rates.
🏡8.5%
The percentage of homes in the US that are worth more than $1 million. That is almost 1 in every 10 homes. The number of these homes has doubled since the pandemic.
Workers of the two largest rail companies for our neighbors to the North, Canadian National and Canadian Pacific Kansas City, are going on strike. Combined these two companies own 75% of the railroads in Canada.
Moody's estimates that the strike will cost the Canadian economy, $250 million/day. It could also spark inflation in the US because we rely on Canada for lumber, fertilizer, and steel.
🏘️1.3%
As rates came down slightly (7.8% to 6.6%) in July, home sales increased by 1.3%. Now this is still down from 2.5% growth last year. But it shows some movement in the housing market.
However, homes are still far too expensive. The median price of a home rose from $416,000 in June to $429,800 in July.
Are you trying to buy a house or waiting for rates to fall?
👀 What to Watch
Economy
The Personal Consumption Expenditures (PCE), the Fed's preferred inflation gauge, will be released on Friday. It should confirm what the Fed knows to be true. Which is inflation has been defeated and they can cut rates.
The report will be a guide for the forecasters to prophesy on the size of the rate cut, 25 or 50 basis points.
My magic ball says 50 basis points. If it sounds like I pulled that number out of my backside, trust your instincts. Question every forecast you read about.
Company/Earnings
🦅CrowdStrike* reports earnings on Wednesday.
After the outage heard round the globe that left everyone asking, “You can put “Crowd and Strike” together?” Crowdstrike reports earnings.
It will be interesting to see if the outage has had any detrimental effects on customer trust.
I expect revenues and profits to take no hits at this point. But I expect a lot of commentary with CrowdStrike trying to reassure customers that they can be trusted. I also expect a lot of questions on the measures CrowdStrike has put in place to ensure this never happens again.
Overall: I believe they'll report strong numbers and the stock will rise. But then again as a shareholder, I am very biased. Matter of fact Imma buy a little bit heading into the earnings. If it drops, I will buy more. I hope it drops.
🤖Nvidia reports on Wednesday.
If Nvidia reports a lower sales number than expected. It will be a bad day in the market.
Sports I Love
💔Here We Go AGAIN
I blame myself for having hope. For believing that this time could be different. For seeing the way, they played and thinking to myself, “Oh they seem to be able to command the game. This might be the year; they finally figure things out.”
As K.J. Parker said, “It’s not the despair that destroys you, it’s the hope.”
If this ain’t facts with this team. If my expectations were bottom barrel then I would be able to enjoy each game for what it is. However, the moment I have a flash of faith that they could be something more. I walk myself in chains off the ship and sink into a sea of despair, depression, and destruction.
The worst part is not the fact that they lost. It is how they lost. They dominated the entire game but could not finish. They had two goals called back because of foolishness. It is almost like the team is cursed or something. I don’t know that my heart can take this much pain for an entire season.
🏈NFL Season Kickoff
There are new rules for Kickoffs. I could try to explain but it would confuse me, you, and all the players. So here is a video explaining it.
Extras
Dallas now has more people employed in finance and insurance than New York. I would never have thought this would be true but it's a real thing.
Texas business-friendly government is "encouraging" many companies to leave the East Coast Island and move to the heat-stricken, hurricane-prone, Dallas.
By The Numbers: According to Axios, Goldman Sachs is building a massive office complex near downtown as part of its expansion plans beyond New York City. The hub is expected to bring 5,000 jobs to Dallas.
JPMorgan Chase has more employees in Texas than in New York. Nearly 13,000 people work at its campus in Plano, which has doubled its employees since it opened in 2017, per the Wall Street Journal.
Also expanding in the Dallas area: Wells Fargo, Deloitte, and Charles Schwab, which moved its headquarters from California to Westlake five years ago.
*I am a tiny shareholder in this company.