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Here are the takeaways from today’s Morning Brief. sign up Every morning you will receive the following message in your inbox:
One week into 2024, investors are facing some truths.
The first truth is that the Magnificent Seven’s stock price doesn’t go up every day (despite its December actions…) and that there are downgrade buzzards lurking on Wall Street. .
Apple (AAPL) stock has been hit by analyst downgrades. Tesla (TSLA) is under pressure due to its modest delivery numbers. Nvidia (NVDA) stock is stalling after a year of strong gains.
Another truth is that this market remains highly sensitive to anything that shakes the view that there will be a series of rate cuts later this year. So bulls, if you have to, support below-average macroeconomic data.
And the final truth is that the US consumer has not yet collapsed and is unlikely to do so in the first half of 2024. I mean, how else can you interpret Friday’s eye-popping December jobs report?
In December, the number of employed people in the labor market increased by 216,000, up from 173,000 in November. Economists had expected 175,000 people to arrive that month.
The U.S. economy created 2.7 million new jobs in 2023. The unemployment rate is at an all-time low. Wages are still rising.
“Economic conditions remain strong, providing a strong cushion for continued consumer spending,” Quincy Crosby, chief global strategist at LPL, told Yahoo Finance Live.
How do you demonstrate this shocking resilience from an investment perspective?
Experts are giving the signal to hold on to last year’s consumer winners.
Another way to look at it is to pay up to the treasury stock of companies that have a clear market share or benefit from economic and social tailwinds.
One of my favorite retail analysts, JPMorgan’s Matt Boss, just raised his same-store sales forecast for Lululemon (LULU), and he was bullish on the name. The company continues to dominate the athleisure space with extremely high quality products at ever more premium prices.
Boss also raised his profit forecast for Abercrombie & Fitch (ANF). I can’t say I’m surprised. The company’s third quarter sales were up significantly, and they probably had similar sales during the holidays. This brand has once again become his favorite destination for people under 30.
We explain why in detail in the episode above of Yahoo Finance’s Lead This Way, in which we chat with Fran Horowitz, CEO of Abercrombie & Fitch.
Other Costco (COST) analysts, including Jefferies’ Corey Tarlow, were extremely bullish after receiving Costco’s December sales results late last week. Costco’s same-store sales increased 8.1% in December, with growth across all product categories.
“Costco is expected to achieve a We believe we are on track to achieve comparable sales of 2% above our club products, 3) our basket grew as customers increasingly shopped for categories other than food,” Tarlow wrote. There is.
At the ICR conference in Florida this week, I suspect there will be good news from many retailers reflecting consumer resilience. Yahoo Finance’s Brooke DiPalma will be reporting throughout this week. Follow X.
That being said, not everything is perfect in the consumption area. This is also confirmed in Bosch’s research.
“Drilling deeper by demographic, our wallet analysis shows that, excluding the $80 billion in incremental COLA benefits (affecting individuals age 62 and older), of the $45 billion in headwinds from students, It shows a $16 billion headwind in consumer spending for individuals under age 62. A $21 billion headwind from loan repayments, SNAP benefit cuts, and a $2 billion drag from tax refunds due to lower gas prices. This was partially offset by $51 billion in tailwinds,” Boss noted.
But overall, consumers have the wind on their side. It’s worth doing a little portfolio shopping in the new year.
Brian Sozzi I’m the executive editor of Yahoo Finance. Follow Sozzi on Twitter/X @BrianSozzi And even more linkedin. Have a tip about a deal, merger, activist situation, or more? Email brian.sozzi@yahoofinance.com.
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