Wings, Usher, and Swift - Market Update Feb. 5-9, 2024
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Welcome back to the Rambling Mind Newsletter. This is your Market Update.
Summary of Topics:
Mexico now produces more US goods than China
Disney magic returns: Blockbuster earnings report
Stats of the Week
5 PM: Australia passes bill that gives workers’ right to ignore employers after 5 PM
32,000 Layoffs in the tech sector so far in 2024.
$23 billion is estimated to have been gambled on the Super Bowl.
$7 Million was the cost of a 30-second ad during the Super Bowl.
1.5 Billion is the estimated number of wings eaten during the Super Bowl.
80% is how much wealth has grown for those under 40 since 2020.
Looking Ahead
Sports I love
Nigeria lost to Ivory Cost in the African Cup of Nations Finals
Man U survived against Aston Villa
Taylor Swift celebrated with her boo on stage
Markets
The Stock Market continues its dominating run looking like Messi and CR7 in their prime, talk about goals galore. Or the Micheal Jordan led Bulls in the 90s, UNSTOPPABLE. Or the 73-win Warriors team, the year Steph changed the NBA. Or Tom Brady and Peyton Manning in their prime or LeBron James in Miami. The point is the Stock Market is on an incredible BULL RUN.
Last week, the S&P 500 crossed the mythical 5,000-point mark.
Does it mean anything? Not really, but we like rounded numbers, so we must talk about it.
RETURNS
Stoic Kelechi Enters Newsletter: Do not throw caution to the wind as the markets continue rallying. Continue dollar cost averaging into your Index Funds and be careful of the stocks you choose to invest in. I sense greed pouring out of the markets.
Tale of the Tape
Economy
According to the U.S. Census Bureau, Mexico is not the top producer of US goods.
🔍Details: After years of contentious relationship with China and the global pandemic shutting down typical supply chains. Businesses have been seeking to onshore many of their supply chains to protect their bottom lines.
Businesses are also looking for ways to avoid geopolitics that remain ever present. Outside of the typical US vs China worries.
There are now consistent worries about goods being shipped from China across the seas as tensions in the Middle East are beginning to rise again.
💬In Their Words: Alfonso de los Ríos, CEO of Nowports, a digital freight forwarding startup, told Axios, "When U.S. companies are looking for new suppliers in Latin America they are looking for resiliency and can't be affected by geopolitics or weather."
Takeaway: Mexico bypasses all of that by being landlocked with the US. Although typically portrayed on the news as a problem child due to immigration. Mexico and the US have $475 Billion Reasons to be as friendly as possible. Chinese companies are also fueling the change as they try to avoid tariffs from the US. They have been investing billions into manufacturing facilities in Mexico.
Earnings
Disney* reported earnings on Wednesday and it was magical. They reported more profit than expected, increased guidance for the year, and announced a partnership with Epic Games creator of Fortnite.
🔍Details: Disney's effort to restore investors’ faith in the company is working. Although revenues were flat from 2022, Disney increased profits by finding ways to cut costs (read fire employees) across its business.
Profit increased from $1.28 Billion in 2022 to $1.9 Billion in 2023.
Losses from its streaming businesses fell from $1.05 Billion in 2022 to $216 million in 2023.
Disney also announced a $1.5 Billion stake in Epic Games and a new streaming service for sports. The new service will be in partnership with Fox and Warner Bros Discovery.
📈Stock Move After Earnings: Shares flew 7% after the report and closed the week up 10% due to great news around its ability to reach its cost-cutting estimate of $7.5 Billion by the end of the year and increasing profits by 20% as well.
👀What to Watch: Can Disney pull off a complete turnaround of the business? Things are moving in a positive direction, but can it continue, or will it fail?
With all efforts aimed at reducing costs and trying to increase revenue at the same time. It is coming at a cost.
Disney+ lost 1.3 million subscribers as prices were increased and password sharing was cracked down on. Which is the opposite of what happened when Netflix did the same thing
Disney is also having a board battle with one of its biggest investors. Can Bob Iger keep control long enough to make all the changes he deems necessary, or will he be booted?
A lot is going on with Disney, but I am pleased with the story. I have a small play in Disney so if they win, I win. I hope they win.
Stats of the Week
The Australian Senate passed a bill that gives workers the legal right to ignore all messages from their bosses/employers after 5 pm. Australia is not the only country that has passed bills like this to protect workers. Italy, Kenya, and Portugal have passed similar laws. France set the pace by passing the first "right to disconnect" law in 2017.
After Covid, workers have been working much longer hours to meet the ever-growing demand of their employers. Especially as more companies push to do more with less (see every tech earnings this year). Unfortunately, in our work-centered and work-worshipping/idolizing the United States, it is highly unlikely we will ever see any similar laws passed here.
Despite Tech companies bringing in all the money. The tech industry started the year with a massive layoff announcement. It is now totaling more than 32,000. However, the economy has remained strong with jobs continually being added to the economy and unemployment remaining low. It just feels so weird in the job market right now. Stay ready folks, never know what might happen.
According to the AP, Americans will bet about $23 Billion on the Super Bowl. This is 35% more than last year. The massive uptick is due to the Taylor Swift effect and the ease of sports betting now with online sportsbooks like FanDuel, DraftKings or ESPNBets. It is expected that 68 million people will make a bet of some sort on the day. A lot of the bets will be placed around what Taylor Swift may or may not do during the day. Some examples:
Users of FanDuel Canada can bet on whether Kelce will propose to Swift at the game.
BetUS offers bets on whether the couple will announce that Swift is pregnant, how many times the broadcast will cut away to a shot of her, and whether the game's MVP will mention her in his speech.
My Take: Taylor Swift will be performing in the Super Bowl either next year or 2026. The NFL will capitalize on this moment as much as they can.
The price for a 30-second ad spot for the Superbowl. Last year, it was $6.5 million for the same 30 seconds. Sporting events are the final place where advertisers can guarantee a certain number of people will see their commercial. The Superbowl is projected to have over 110 million viewers, it is the only time that everyone in the US is going to be watching the same thing at the same time. Traditional TV advertising is dead as most people are either on streaming services or social media. The NFL can charge whatever they want, and they do.
According to the National Chicken Council (Yes, it’s a real thing), 1.5 Billion wings were consumed during the Super Bowl across the US. Did you eat any wings? Was it regular or nuggets?
Some good news for all my fellow young-ins. Since 2020, all of us under 40 have seen our wealth grow by a staggering 80%. Thanks to all the stimmies (stimulus checks for my old folks) and the stock market going bonkers. Combined with most people not having to pay student loans for 3 years. It gave a period where many people discovered the stock market and took some big gambles that paid off for some people.
Looking Ahead
Economy
On Tuesday, inflation for January will be released. January’s report will give us an insight into the possibility of the Fed cutting rates in March. Jerome and his pals have said it is unlikely they cut rates as the economy has remained strong. Investors believe otherwise.
On Thursday, retail sales numbers will be released. It will show if consumers are still spend happy or pulling back to start the year. This combined with the consumer sentiment survey that will be released on Friday, will give an insight into how consumers are feeling.
Earnings
No company I care about will be reporting. However, here are the rest.
Sports I Love
Nigeria Lost
So close but yet so far. Ivory Coast dominated the game from beginning to end. We had our chance after taking the lead in the first half but that did not last at all. Hopefully, this is not a sign of things to come for World Cup qualifications.
Man U Playing with my Heart
Man U has won 4 games in a row. Tempting me to have faith in the team again. But I refuse my heart is too hurt. However, I enjoy seeing Hojlund score game after game as he settles in as the striker.
Swift is Crying Tears of Joy
The Chiefs came back in Overtime to beat the 49ers. It was an awesome game to watch. Literally back and forth but in the end Mahommes is that DUDE!! He marched the team down the field in Overtime to win like it was nothing!
*I am a tiny shareholder in this company.