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Why was November the best month of the year for stocks? · The Financial Exchange Show

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Speaker 1: Veterans Development Corporation. This is the Financial Exchange with Chuck
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1:12
Speaker 2: Kick it off the month of December.
1:13
Speaker 3: It's Chuck, Mike and Tucker with you, and we got
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Speaker 3: a busy week to get the month started.
1:19
Speaker 2: Here.
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Speaker 3: A whole bunch of economic data ism manufacturing was out
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Speaker 3: at ten am this morning. We'll discuss that today. We
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Speaker 3: also have job openings tomorrow with the Joltz Report. On Wednesday,
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Speaker 3: we get ism services data, Thursday, some jobs claims. Friday
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Speaker 3: we get the Jobs report and consumer sentiments. So it
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Speaker 3: is a busy week that we've got here. But Mike, first,
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Speaker 3: let's recap kind of what we saw in November, where
1:43
Speaker 3: the S and P five hundred had itself a nice
1:45
Speaker 3: little month here at open, yeah, six percent up yeah,
1:48
Speaker 3: open the month of November fifty seven to twenty three.
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Speaker 3: It closed the month of November at six thirty two.
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Speaker 3: So yeah, you saw basically about a five percent upward
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Speaker 3: move for the month of November here. This after a
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Speaker 3: choppy October, and obviously the question is, okay, like where
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Speaker 3: does this market go from here? Because you're sitting pretty
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Speaker 3: much at all time highs right now. You've got a
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Speaker 3: market that is expensive. It's trading twenty two times forward
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Speaker 3: earnings based on data from fact sets earnings insight from
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Speaker 3: November twenty second, So it's a steeply valued market. And
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Speaker 3: the questions are all about, hey, where can this market
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Speaker 3: go next year with a new administration in the White
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Speaker 3: House and one that views the stock market as a.
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Speaker 2: Report card for how they're doing economically.
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Speaker 4: Yeah, it's something we've discussed really since the beg since
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Speaker 4: the beginning of November and the results of the election
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Speaker 4: were known, which is it is going to be an
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Speaker 4: extremely I don't know how you describe it, narrow, needle
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Speaker 4: to thread or just delicate market to look forward here,
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Speaker 4: and as we've talked about it, there's going to be
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Speaker 4: some unique challenges. Pared to Donald Trump's first administration, there
3:03
Speaker 4: were unique challenges then too, they're just a different set
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Speaker 4: of them as we head into twenty twenty five.
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Speaker 3: So that's where we stand right now, and if you're
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Speaker 3: looking at this market, I think one thing that I
3:15
Speaker 3: do like to point out, even though tech is leading
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Speaker 3: the way today, that has not been the case in
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Speaker 3: this market in recent months. If you take a look
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Speaker 3: at the different sectors of the S and P five hundred,
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Speaker 3: and if you say, okay, let's look at this year
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Speaker 3: to date first.
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Speaker 2: And see what's been doing the best.
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Speaker 3: Like, how many people had financials being the best performing
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Speaker 3: sector in the S and P five hundred this year
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Speaker 3: when it started?
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Speaker 4: Yeah, not not likely a whole lot of them. Not
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Speaker 4: many Communication services number two. Okay, at least that one.
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Speaker 4: You say, Yeah, when I look at you know, communication
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Speaker 4: services and what falls under that umbrella, Okay, you know
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Speaker 4: you got Google and Meta in there, so there's some
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Speaker 4: tech exposure. Sure, I could see that being you know,
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Speaker 4: something that we're seeing, but you know, again, financials being
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Speaker 4: the leader kind of something that that gives you a
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Speaker 4: little bit of pause there, and then you continue down
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Speaker 4: the list as far as hey, what if you know
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Speaker 4: the best performing sector's been Utilities is number three. And
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Speaker 4: this one again, financials and utilities are not two things
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Speaker 4: that you typically see, as you know, things that move
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Speaker 4: in lockstep. Typically, financials a little bit more of a
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Speaker 4: cyclical exposure when the economy gets going, so today utilities
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Speaker 4: much more. Hey, let's let's you know, flock to them
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Speaker 4: when things pull back. But they've had this tailwind because
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Speaker 4: of artificial intelligence and the power demands for it in
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Speaker 4: the idea that hey, maybe this could be good for
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Speaker 4: you know, overall power capacity and overall size of the
4:39
Speaker 4: market in the US, I mean to be, to put
4:43
Speaker 4: it bluntly, you're talking about a potential forecast here where
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Speaker 4: we vastly expand demand of electricity, and notoriously utilities are
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Speaker 4: pretty slow to respond to that demand. And so I
4:56
Speaker 4: mean economic if you've ever taken any economics course, that's
4:59
Speaker 4: the first thing to teach, right, supply and demand. What
5:01
Speaker 4: happens when demand goes up without supply increasing, you have
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Speaker 4: an increase in prices, and so pretty compelling story when
5:08
Speaker 4: it comes to utilities.
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Speaker 3: Next two sectors you got, you got industrials and consumer discretionary. Discretionary,
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Speaker 3: though I will caution was basically one of the worst
5:15
Speaker 3: performing sectors in the market through late October. It's really
5:19
Speaker 3: been Tesla's recent performance in the last month that has
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Speaker 3: kind of vaulted into that spot.
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Speaker 2: And then you've got technology, which is again kind of
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Speaker 2: middle of the pack overall this year.
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Speaker 3: But the interesting thing sp technology sector was the best
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Speaker 3: performing sector for the first half of the year. And
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Speaker 3: now if you look for you know, again, let's look
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Speaker 3: since July first, Just as an example, here the S
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Speaker 3: and P five hundred. I'm sorry, the SP five hundred
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Speaker 3: technology sector second worst performing sector since July first of
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Speaker 3: this year. The worst performing one is healthcare, and so
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Speaker 3: it's been everything else that's actually been carrying this market
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Speaker 3: for the last five months. I know that tech and
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Speaker 3: AI have gotten all this hype, but if you hopped
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Speaker 3: on the AI train halfway through this year, hasn't actually
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Speaker 3: been the right move for you.
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Speaker 5: Like, outside of a few individuals.
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Speaker 4: Yeah, inside of a few individual companies who you know,
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Speaker 4: we can talk about and have done quite well. If
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Speaker 4: you bought the sector right, it hasn't been the thing
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Speaker 4: that's carried now. I think the positive side of this,
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Speaker 4: to put some positive spin on it, is you don't
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Speaker 4: necessarily want to see one area or one company leading
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Speaker 4: and dragging up the entire market. What we are seeing
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Speaker 4: as an expansion into other areas, and that can be
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Speaker 4: that can be signs of a healthy, positive market. It
6:36
Speaker 4: could also be signs of irrational exuberance and everybody just
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Speaker 4: buying everything. But you know, if I want to take
6:43
Speaker 4: the optimistic view, I'll take it as Hey, many companies
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Speaker 4: are now profiting many companies have worked through what was
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Speaker 4: a tricky four years and are growing their margins and
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Speaker 4: investors are appropriately rewarding them.
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Speaker 3: So let's touch on some of the economic data that
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Speaker 3: we're getting this week. I know this more. At ten am,
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Speaker 3: we got ISM manufacturing data. ISM manufacturing PMI came in
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Speaker 3: at forty eight point four compared to the previous reading
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Speaker 3: of forty six five.
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Speaker 2: The expectation was for forty seven to five.
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Speaker 3: And the question that I think I'm trying to sort
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Speaker 3: through on ISM manufacturing here is ultimately you ended up
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Speaker 3: with new orders, you know, surging from forty seven to
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Speaker 3: one to fifty point four. What I'm trying to figure
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Speaker 3: out is how much of this is companies trying to
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Speaker 3: front run tariff implementation and just trying to you know,
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Speaker 3: get stuff done before the end of the year and
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Speaker 3: really before January twentieth, and how much of this is
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Speaker 3: an actual real uptick in you know, longer term capacity
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Speaker 3: and capability.
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Speaker 2: And I don't think that there's any way to tell
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Speaker 2: that right.
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Speaker 5: Away here, Now, correct me if I'm wrong.
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Speaker 4: At at forty eight something, we are still in a
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Speaker 4: pretty ugly survey for manufacturing in general. Right like this,
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Speaker 4: this is not exactly a strong story of expansion. It's
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Speaker 4: just a story of improvement compared to last month, it is, and.
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Speaker 3: The bulk of that came through new orders. The interesting
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Speaker 3: thing that you did see in this data was even
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Speaker 3: though new orders move from forty seven to one to
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Speaker 3: fifty point four, prices paid went from fifty four eight
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Speaker 3: to fifty point three. So it wasn't something where you
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Speaker 3: saw a huge jump in prices as a result of,
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Speaker 3: you know, whatever expansion in activity was happening here relative
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Speaker 3: to before. But the other thing that you come back
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Speaker 3: to on this is, look, this is a survey. It's
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Speaker 3: it's soft data. It's not something where you can, you know,
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Speaker 3: conclusively say anything about this, especially because as we've been
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Speaker 3: talking look for the last two three years, two years
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Speaker 3: really in particular, this data series has been in the
8:44
Speaker 3: dumps and in a spot where typically it's been indicative of,
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Speaker 3: you know, meaningful recession, and there's been no supporting economic
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Speaker 3: data around it that's really said, yeah, you're you're definitely
8:56
Speaker 3: in recession. So this is one that I think I've
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Speaker 3: been trying to take it with a grain of salt
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Speaker 3: for the last couple of years because.
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Speaker 4: It's indicated recession for the last several and we haven't
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Speaker 4: gotten one.
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Speaker 3: Yeah, it just has not had the right signal to
9:11
Speaker 3: noise ratio for quite some time here.
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Speaker 2: But you did have some improvement here.
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Speaker 3: Whether it means anything, I don't know that you can
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Speaker 3: make that judgment today. I think we are still much
9:21
Speaker 3: more looking at Hey, show me what's happening with the
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Speaker 3: labor market, show me what's happening with housing. Those are
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Speaker 3: areas where I think you're getting better signal than a
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Speaker 3: place like this.
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Speaker 4: I've heard from a lot of we've heard from a
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Speaker 4: lot of retail executives over the last month or so
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Speaker 4: about maybe criticizing tariffs and saying, look at a land
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Speaker 4: in higher prices for consumers. I don't know that we've
9:42
Speaker 4: seen a lot definitive about whether or not those same
9:46
Speaker 4: retailers are stocking up like we've talked about, Right, it
9:48
Speaker 4: made logical sense for Walmart to go and buy a
9:51
Speaker 4: whole bunch of TVs. You know that they assume that
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Speaker 4: they'll be able to sell in twenty twenty five. But
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Speaker 4: I don't know that we've seen a lot of evidence
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Speaker 4: that it's actually happening, And we might not for another
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Speaker 4: few months. But again to your point, it would make
10:03
Speaker 4: a fair bit of logical sense for these companies to
10:05
Speaker 4: stock up on inventory take a temporary hit to earnings
10:09
Speaker 4: because of it, in order to avoid presumed sanctions and
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Speaker 4: rather tariffs.
10:14
Speaker 5: In twenty twenty five.
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Speaker 2: Let's take a quick break here.
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Speaker 3: When we come back, we got a couple of leadership
10:19
Speaker 3: shakeups that we're going to be discussing. One it's Stilantis
10:22
Speaker 3: one at Intel will fill you in on the details
10:25
Speaker 3: after this.
10:27
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11:27
Speaker 3: Mike, we've got a couple CEOs on the outs here.
11:32
Speaker 2: Do you want to start with Stillantis?
11:34
Speaker 4: Sure, we can get started with Stilantis. And what's been
11:38
Speaker 4: a recent I mean longer term. I think this company
11:42
Speaker 4: has had problems, but quite frankly, their performance was pretty
11:45
Speaker 4: decent at the onset of COVID, and they were able
11:48
Speaker 4: to really charge some high prices, and it seems that
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Speaker 4: their reactions since about mid twenty twenty three to the
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Speaker 4: state of demand has been pretty abysmal, and their earnings
11:59
Speaker 4: have reflected that.
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Speaker 2: Yeah.
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Speaker 3: So Stillantis, who is the the parent company of Chrysler.
12:05
Speaker 3: Just if you're not familiar with them, if you're like,
12:06
Speaker 3: what the heck is the Stalantis?
12:08
Speaker 2: Yeah, it's it's that.
12:09
Speaker 3: That's the name that they picked because I don't know,
12:12
Speaker 3: they thought it sounded great and who knows why.
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Speaker 4: Similar ring to a General Motors or a Ford Stillantis.
12:21
Speaker 3: Again, I've said this before, but I've had a really
12:24
Speaker 3: bad case of Stillantis for the last sounds like and
12:27
Speaker 3: it's it's been challenging to get over. My feet are
12:30
Speaker 3: just not the same. But look, so Carlos Taveras, the CEO,
12:34
Speaker 3: is going to be stepping down effective immediately. And Stilanta's
12:37
Speaker 3: shares are down over forty percent this year. So it's
12:40
Speaker 3: been a real you know, a real dog in markets
12:44
Speaker 3: this year. And I think in terms of trying to
12:47
Speaker 3: figure out, look, what is you know, what what's actually.
12:51
Speaker 2: Going on here? A couple of things.
12:53
Speaker 3: Number One, US dealers are saying, look, the cars that
12:55
Speaker 3: you're sending us are really expensive compared to the competition,
12:59
Speaker 3: so that that's part of it. Back in September, a
13:02
Speaker 3: dealer advisory group wrote a letter to Tavares blaming him
13:07
Speaker 3: for quote disastrous choices in handling the market, so like
13:12
Speaker 3: basically saying, guys, this is just the cars that you
13:14
Speaker 3: are giving us are not price competitive and so they're
13:17
Speaker 3: just sitting on our lots. You've also had repeated pauses
13:21
Speaker 3: of production at Italian plants this year. This led to
13:25
Speaker 3: the first national auto strike in twenty years in Italy.
13:29
Speaker 3: So again Italy look as an Italian like, we're not
13:33
Speaker 3: exactly known for you know, dramatic.
13:35
Speaker 2: Periods of labor and political peace.
13:37
Speaker 3: But when you go twenty years without, you know, a
13:40
Speaker 3: strike at auto plants, that's kind of notable, and then
13:42
Speaker 3: to have one come back, it's, hey, gee, you know
13:45
Speaker 3: what changed here? So I think overall, this is a
13:50
Speaker 3: company where you're trying figure out, hey, what is it
13:55
Speaker 3: that they do well and how do they, you know,
13:57
Speaker 3: get to market the way that they want to at
14:00
Speaker 3: the prices they want to. And ultimately it comes back
14:04
Speaker 3: to leadership and clearly the board saying yeah, this isn't
14:07
Speaker 3: gonna work.
14:08
Speaker 4: And so you got the CEO stepping down here, right,
14:11
Speaker 4: And I think the stepping down of immediately is interesting too, Right.
14:15
Speaker 4: This is not something where they're looking for any sort
14:17
Speaker 4: of transition period or anything along those lines, which not
14:22
Speaker 4: a huge head scratcher, but it's interesting to me that, hey,
14:25
Speaker 4: this guy is out and out immediately and it's gonna
14:29
Speaker 4: be again, like I said, a challenging turnaround because they
14:33
Speaker 4: are I mean, what options do you have other than
14:36
Speaker 4: lowering the prices of your vehicles that clearly aren't in
14:38
Speaker 4: high demand.
14:40
Speaker 5: I don't know what do you think overall?
14:42
Speaker 3: I mean, I'm just trying to think of this in
14:44
Speaker 3: comparison to the other major US automakers, most notably Ford
14:48
Speaker 3: and GM.
14:49
Speaker 5: Yeah, and you.
14:50
Speaker 3: Look at it, and you know, I can look back
14:54
Speaker 3: to the nineteen nineties and in the nineties all three
14:58
Speaker 3: of them were kind of on pars far as like
15:00
Speaker 3: the overall business and the operations of those companies. And
15:04
Speaker 3: as we headed into the financial crisis. Remember GM and
15:09
Speaker 3: Chrysler needed significant bailouts to get through the financial crislist
15:12
Speaker 3: Ford the financial crisis.
15:15
Speaker 2: Ford did not.
15:16
Speaker 3: But it's something where it felt like this all really
15:20
Speaker 3: started to change then, where GM came out of basically
15:25
Speaker 3: that whole financial crisis and was stronger than it was
15:29
Speaker 3: in the last twenty years. Some of that might be
15:32
Speaker 3: because of how it went through that in terms of
15:35
Speaker 3: its specific deal with the government. Some of it might
15:37
Speaker 3: have been, you know, leadership coming out with Mary Barratt
15:40
Speaker 3: taking over after the ignition switch issues that they had.
15:44
Speaker 3: In any case, GM you could point to and be like, yeah,
15:46
Speaker 3: that they came out stronger. Ford you look at and
15:50
Speaker 3: you said, hey, they might not have needed money in
15:53
Speaker 3: two thousand and eight and two thousand and nine, but man,
15:56
Speaker 3: from a strategic perspective, they've made some missteps for the
15:59
Speaker 3: last couple of years that have been problematic in terms
16:02
Speaker 3: of probably investing too much on the EV side, But
16:04
Speaker 3: they still have the F one fifty and all their
16:06
Speaker 3: trucks they can rely on. You look at Chrysler and
16:11
Speaker 3: Dodge and Ram and Jeep and Jeep, and you look
16:17
Speaker 3: at it and you go many they kind of had
16:19
Speaker 3: it made, I mean back in the nineties. And again,
16:22
Speaker 3: I know everything can change over like twenty thirty years,
16:25
Speaker 3: but you had again one of the most popular pickup
16:29
Speaker 3: trucks in the country with the Ram, which now by
16:31
Speaker 3: all accounts has kind of fallen behind both its competitors
16:33
Speaker 3: in the F one fifty and what GM has with
16:37
Speaker 3: the uh the Silverados, the Silverado and I forget the
16:41
Speaker 3: GMC version of it is, but you know, they've fallen
16:43
Speaker 3: behind there. The Dodge Caravan was like the way that
16:49
Speaker 3: basically everyone hauled kids around in the nineties.
16:52
Speaker 5: One cheeting by Honda and Toyota.
16:53
Speaker 3: Now everyone's driving Rav fours and crvs now exactly, and
16:58
Speaker 3: so you kind of look at it and you go, o, case,
17:00
Speaker 3: there's this cheap business that's there, But in terms of
17:02
Speaker 3: the overall scale, it's still niche compared to the other ones. Man,
17:06
Speaker 3: you guys were kind of in the cafpird seat in
17:07
Speaker 3: a couple places, and you just you couldn't get there,
17:11
Speaker 3: and it's unclear what they really do well.
17:13
Speaker 5: Now.
17:13
Speaker 4: Yeah, look, I think what it comes down to is GM, Ford,
17:18
Speaker 4: even Stilantis all have vehicles that owners are love and
17:22
Speaker 4: are passionate about. They have valuable brands attached to them.
17:24
Speaker 4: But Ford and Stalantis in particular have had very serious
17:28
Speaker 4: execution problems. And I'd say Stillantis have been longer running
17:31
Speaker 4: than Ford's. But in either case, like you look it forward,
17:35
Speaker 4: the the quality control issues and the investment in EV was,
17:40
Speaker 4: you know, in hindsight a real serious problem for them. Stalantis,
17:45
Speaker 4: I don't know what to say other than yeah, it's
17:46
Speaker 4: been a multi decade long fall from fall from grace
17:50
Speaker 4: here in terms of the most popular vehicles that are
17:52
Speaker 4: out there, still very valuable brands, but yeah, I can't
17:57
Speaker 4: put it. I can't point to any on vehicle in
18:01
Speaker 4: that lineup that is more popular than anywhere else. And
18:05
Speaker 4: I can do that with Ford, I can do that
18:06
Speaker 4: with General Motors.
18:07
Speaker 3: Intel with the CEO change as well. Pat Gelsinger has
18:10
Speaker 3: been there for almost four years, he's out. Instead, you're
18:13
Speaker 3: gonna have CFO David Zinzer and Products CEO MJ.
18:17
Speaker 2: Holtthouse.
18:18
Speaker 3: They're gonna be the interim co CEOs while they search
18:21
Speaker 3: for a new leader for the company long term. Gelsinger,
18:25
Speaker 3: if you're not familiar with him, everyone went when he,
18:28
Speaker 3: you know, went back to run the company, everyone kind
18:31
Speaker 3: of heralded the move because they said, look, you finally
18:34
Speaker 3: have an engineer running the company again. He's someone who's
18:37
Speaker 3: the chief technical officer at Intel, you know earlier in
18:40
Speaker 3: the uh around the turn of the millennium.
18:42
Speaker 2: Hey, this is great.
18:43
Speaker 3: You're gonna get someone who knows the product and knows
18:45
Speaker 3: how to build it running the company. But ultimately, some
18:49
Speaker 3: really tough decisions that he made. Look in a business
18:52
Speaker 3: that may take a while for those decisions to pan
18:54
Speaker 3: out the way you know, he hoped. He's just not
18:57
Speaker 3: gonna have a chance to see it through because the
18:59
Speaker 3: performance in that four year time period has been quite.
19:02
Speaker 2: Bad for the company. Yeah.
19:03
Speaker 4: Look, it's an industry where you have to make investments
19:06
Speaker 4: a decade ahead of time and hope that they pay
19:08
Speaker 4: off well. And Intel's bets we're not in the right
19:11
Speaker 4: areas for what ended up paying off, so Gelsinger is
19:15
Speaker 4: going to be out.
19:16
Speaker 3: We'll see what direction Intel goes in for their new
19:19
Speaker 3: permanent CEO. But right now, couple of interim co CEOs
19:24
Speaker 3: running the company.
19:25
Speaker 2: Take a quick break here.
19:27
Speaker 3: When we come back, we got Wall Street Watch, and
19:30
Speaker 3: then we're talking Black Friday.
19:41
Speaker 1: Like us on Facebook and follow us on Twitter. Act
19:44
Speaker 1: TFE show breaking business news is always first right here
19:48
Speaker 1: on the Financial Exchange Radio Network. Time now for Wall
19:53
Speaker 1: Street Watch, a complete look at what's moving market so
19:56
Speaker 1: far today, right here on the Financial Exchange Radio Network.
20:00
Speaker 6: Well after the Dow in SMP five hundred notch their
20:03
Speaker 6: best month of the year, investors are turning the calendar
20:07
Speaker 6: to December with an ie on the latest jobs data
20:11
Speaker 6: do out later this week. Right now, the Dow is
20:15
Speaker 6: off by three tenths of a percent, or one hundred
20:17
Speaker 6: and twenty eight points, SMP five hundred is up by
20:21
Speaker 6: two tenths of a percent or twelve points, and the
20:23
Speaker 6: Nasdaq is up nearly one percent higher one hundred and
20:26
Speaker 6: eighty six points. Russell two thousand is off by about
20:29
Speaker 6: a third of a percent.
20:31
Speaker 5: Let's see here.
20:32
Speaker 6: Tenyure Treasure reeled up by three basis points at four
20:35
Speaker 6: point two to two percent, and crude oil is up
20:38
Speaker 6: two thirds of a percent, trading at sixty eight dollars
20:41
Speaker 6: and forty seven cents a barrel. Big news in the
20:44
Speaker 6: chip sector this morning, where Intel announced that CEO Pat
20:48
Speaker 6: Gelsinger retired from the company effective yesterday. Intel CFO David
20:54
Speaker 6: Zinzer and Intel Products CEO Michelle Johnston holt House were
20:59
Speaker 6: named in room co CEOs. Intel shares are up three
21:03
Speaker 6: percent on the news. Meanwhile, Still at the shares down
21:07
Speaker 6: by seven percent after CEO Carlos Tavares stepped down from
21:11
Speaker 6: his role at the jeep maker effective immediately, with a
21:14
Speaker 6: company sided different views between Tavares and the board of directors.
21:19
Speaker 6: Sticking with the auto sector, where Tesla up by three
21:22
Speaker 6: percent after its VP of AI software tweeted that version
21:26
Speaker 6: thirteen of the company's full self driving driver assistance software
21:32
Speaker 6: had started rolling out to some of its customers. JP
21:36
Speaker 6: Morgan upgraded Gap stock to overweight, citing a strong start
21:40
Speaker 6: to the holiday season and a multi year growth outlook.
21:43
Speaker 6: Shares in the retailer up six percent today, and super
21:48
Speaker 6: microcomputer shares are up by eighteen percent after a special
21:52
Speaker 6: committee rule that have found no evidence of misconduct at
21:56
Speaker 6: the AI server maker and appointed a new chief accounting officer.
22:02
Speaker 6: I'm Tucker Silvan.
22:02
Speaker 2: That's Wall Street Watch, Mike. Let's talk a little bit
22:06
Speaker 2: about Black Friday.
22:07
Speaker 3: We're starting to get some data on how the shopping
22:11
Speaker 3: has gone. I'll quote here from the New York Times.
22:15
Speaker 3: Shoppers spent ten point eight billion dollars online on Friday,
22:18
Speaker 3: according to data on Saturday from Adobe Analytics. That's on
22:21
Speaker 3: top of the six point one billion spent online on Thursday,
22:24
Speaker 3: around nine percent more than the previous year. Another metric
22:27
Speaker 3: for Mastercard's Spending Pulse, which measures retail sales across all
22:30
Speaker 3: forms of payment, found the online sales on Black Friday
22:33
Speaker 3: increased by nearly fifteen percent, but that instore sales increased
22:36
Speaker 3: by only point seven percent, for an overall increase of
22:38
Speaker 3: three point four percent. To the jewelry, electronics, and apparel
22:43
Speaker 3: were the top purchases. Your thoughts on what we're seeing
22:45
Speaker 3: so far from the holiday shopping season.
22:47
Speaker 4: Well, if it holds true, then that online spend surge
22:50
Speaker 4: is pretty robust. Like that, that's a big, big number.
22:53
Speaker 4: It still might only convert into a low single digit
22:57
Speaker 4: overall holiday shopping season increase. And that's entirely possible. But nonetheless,
23:03
Speaker 4: if online sales come in between nine and fifteen percent
23:06
Speaker 4: up compared to last year.
23:07
Speaker 5: Then that's huge.
23:09
Speaker 4: The few questions that I have on this are how
23:12
Speaker 4: much of this is timing?
23:14
Speaker 5: Is a big one.
23:15
Speaker 4: Right, So we had a very late Thanksgiving this year
23:17
Speaker 4: compared to last year, and so did people put off
23:20
Speaker 4: shopping so substantially that they had a much bigger order
23:23
Speaker 4: to fill when it came to Black Friday, and so
23:25
Speaker 4: they were just out there for more stuff. Is there
23:28
Speaker 4: some other trend playing out here where people were apprehensive
23:32
Speaker 4: about the election and we're putting off purchases and then
23:35
Speaker 4: that passed and now you have a big surgeon spending coming.
23:38
Speaker 4: I'm not entirely sure yet, but look, this is there's
23:42
Speaker 4: no way to phrase this. I think is bad news.
23:45
Speaker 4: I think the worst piece that you can pull from
23:46
Speaker 4: this is that the in store shopping only increased zero
23:50
Speaker 4: point seven percent year over year, and that would be
23:52
Speaker 4: less than inflation, and so that is a bad sign
23:55
Speaker 4: for the brick and mortar retailers out there, But most
23:58
Speaker 4: of them are test painting in Cyber Monday and seeing
24:02
Speaker 4: those sales shift elsewhere, I think.
24:04
Speaker 3: Let's talk a little bit about Cyber Monday with that.
24:06
Speaker 3: I've got a problem with Cyber Monday, Mike.
24:09
Speaker 2: Do you know it's gotten too commercialized? What I mean?
24:15
Speaker 5: What do you mean? Like it's it's.
24:18
Speaker 3: Gotten too commercialized Cyber Monday.
24:22
Speaker 4: This isn't Valentine's Day, Chuck. It is invented by commercial
24:25
Speaker 4: companies to get you to shop on Yes, I know.
24:27
Speaker 4: That's that's the best the joke. That's the commercialized.
24:30
Speaker 3: You know, everyone always talks about all like Thanksgiving has
24:32
Speaker 3: gotten too commercialized.
24:33
Speaker 4: Yeah, no, no, Cyber Monday's gotten too commercialized.
24:36
Speaker 3: But it used to be this nice point time when
24:38
Speaker 3: everyone just sat on their computers and didn't talk to anyone,
24:40
Speaker 3: and now it's all about shopping.
24:41
Speaker 5: Yeah.
24:42
Speaker 2: Uh.
24:42
Speaker 3: In any case, according to data from Adobe Analytics, uh,
24:46
Speaker 3: Cyber Monday's spending is expected to be thirteen point two
24:50
Speaker 3: billion dollars today. That's up six point one percent from
24:54
Speaker 3: last year.
24:55
Speaker 2: Uh. This is also though again.
24:56
Speaker 3: It's listen, I can't tell you how many different retailers
25:00
Speaker 3: I got emails from two three weeks ago. Hey, it's
25:03
Speaker 3: you know Black Friday, come early. Our Cyber Monday sales starts,
25:07
Speaker 3: you know on October thirty thirty. First, Like, it's just
25:11
Speaker 3: everything has kind of been extended as well. So it's
25:15
Speaker 3: very much an apples to oranges comparison in a lot
25:18
Speaker 3: of cases, just because you're seeing these these sales pop
25:22
Speaker 3: up earlier and earlier, partly, as you mentioned, because of
25:24
Speaker 3: when Thanksgiving fell this year. It's the latest that ever
25:27
Speaker 3: can fall on the twenty eighth, and so companies wanted
25:31
Speaker 3: to get a jump on those sales as opposed to
25:34
Speaker 3: having to wait until, you know, early December for Cyber
25:37
Speaker 3: Monday sales to come in.
25:38
Speaker 5: Right, Yeah, I'm taking a look around.
25:41
Speaker 4: I mean, Chuck, I know that you completed your shopping
25:43
Speaker 4: like three months ago, so you're not a relevant point
25:47
Speaker 4: for this argument. But I haven't seen anything on Cyber
25:50
Speaker 4: Monday that I was not seeing. I did a lot
25:52
Speaker 4: of shopping over the long over the long weekend here,
25:55
Speaker 4: we had our office closed on Friday, so I did
25:57
Speaker 4: a fair bit of holiday shopping over the last few.
25:59
Speaker 5: Days and browsing here.
26:01
Speaker 4: I don't feel as though I would have gotten any
26:04
Speaker 4: better deals over the last couple of days, and I
26:07
Speaker 4: was buying the type of thing that you do look
26:08
Speaker 4: for deals on, right, Like my wife and I reached
26:11
Speaker 4: buying each other smart watches for the holidays. I bought
26:15
Speaker 4: the kids some stuff on Amazon, and you know again.
26:18
Speaker 2: Wait, you already know, like you've already discussed what you're getting.
26:21
Speaker 4: Each other, not entirely, but in this case with like
26:25
Speaker 4: some of the details on a smart watch, I was
26:28
Speaker 4: just we had already talked about that one because we
26:31
Speaker 4: bought it for we had a momentary freak op because
26:34
Speaker 4: we had a family member with a health scare and
26:36
Speaker 4: were like, all right, nope, we're both getting some smart
26:39
Speaker 4: watches for the holidays here yep, but no for everything else.
26:42
Speaker 5: Now, we're not discussing that, but yeah, a lot of it.
26:45
Speaker 5: A lot of our holiday shopping is usually about activities.
26:47
Speaker 4: Like we're going on a ski trip in February, so
26:50
Speaker 4: guess what the kids are all getting ski gear for
26:53
Speaker 4: Christmas this year because they have never gone skiing before.
26:56
Speaker 2: Tucker, you been poking around on anything.
26:58
Speaker 6: I always keep my eye on it and check out
27:01
Speaker 6: the you know, the review websites if you will, that
27:04
Speaker 6: are out there, and nothing. It's just information overload really
27:09
Speaker 6: in terms of like going through all the categories and
27:11
Speaker 6: seeing what the best deal is. It's just a lot
27:13
Speaker 6: of information throwing my way that I don't have the
27:16
Speaker 6: patience to sift through.
27:17
Speaker 2: And yeah, I.
27:18
Speaker 4: Don't find that to be a useful activity either. I
27:20
Speaker 4: think what I find to be spent.
27:22
Speaker 2: Eight hours to save thirty two dollars on six.
27:25
Speaker 4: Different gifts, right, Like what I find to be enjoyable
27:27
Speaker 4: and useful is Okay, I have a list of things
27:29
Speaker 4: that I'm going to be shopping for this season, and
27:32
Speaker 4: do you know, do I find any special deals on
27:35
Speaker 4: those items? Do I feel like I'm getting a real
27:37
Speaker 4: deal when I actually log in on Friday or Monday
27:40
Speaker 4: and see did they discount it any further? I get
27:43
Speaker 4: some of that endorphin rush, I guess when I see
27:47
Speaker 4: that price knocked down. But yeah, going through Wirecutters one
27:50
Speaker 4: hundred and fifty best Cyber Monday deals like forget about it?
27:53
Speaker 6: Like you have time for this, Like I'll go through
27:55
Speaker 6: and look at categories that might pop out to me,
27:58
Speaker 6: like Apple deals or like kitchen or gaming deals.
28:01
Speaker 2: That's it.
28:02
Speaker 6: I'm not gonna go through one hundred and fifty different
28:04
Speaker 6: deals like forget.
28:05
Speaker 5: It, but oh, trampoline for seven hundred dollars.
28:07
Speaker 6: I didn't see that one.
28:08
Speaker 2: Uh yeah?
28:09
Speaker 3: And then shoulder surgery for two thousand on your deductible.
28:13
Speaker 5: I'm not great jumping on the trampoline.
28:15
Speaker 4: Come on, Mike, with your with your back, you shouldn't
28:18
Speaker 4: be jumping on anything, correct.
28:19
Speaker 2: Yeah. Yeah, yeah. So the only Cyber Monday thing that
28:22
Speaker 2: I do every year I.
28:23
Speaker 3: N towels like cool neat hey, listen, occasionally you need
28:28
Speaker 3: new bath towels. I think new bath towels are a
28:30
Speaker 3: great gift personally, but that's just me.
28:33
Speaker 2: Yeah.
28:33
Speaker 3: The only thing I do every Cyber Monday is the
28:37
Speaker 3: liquor store that I shop at, they do a Cyber
28:40
Speaker 3: Monday sale for unlimited gift cards every year, so I basically,
28:43
Speaker 3: over the course of the year, I save up my
28:46
Speaker 3: beer money and then they do it. It's a ten
28:49
Speaker 3: percent off unlimited gift cards, so you save an instant
28:53
Speaker 3: ten percent on all of your beer and wine for
28:56
Speaker 3: the full year, and you just have to be dedicated
28:58
Speaker 3: to save that money up, oh you know, the twelve months,
29:01
Speaker 3: and then you're good to go, you know, for that one.
29:04
Speaker 3: So that's my Cyber Monday purchase every year, including this one.
29:08
Speaker 3: So it's I get something for myself on Cyber Monday.
29:11
Speaker 3: It's because it's it's the best gift that you can get,
29:13
Speaker 3: you know. Let's take a quick break here. When we
29:18
Speaker 3: come back, let's talk a little bit about what we're
29:20
Speaker 3: seeing in the world of credit card transaction fees right now.
29:25
Speaker 3: This has been a topic that's been growing in terms
29:28
Speaker 3: of the chatter about it recently with some potential legislation
29:31
Speaker 3: coming through Congress. We'll talk about this when we return.
29:36
Speaker 1: Thankst us six one, seven, three, six, two thirteen eighty
29:39
Speaker 1: five with your comments and questions about today's show, and
29:42
Speaker 1: let us know what you think about the stories we
29:44
Speaker 1: are covering. This is the Financial Exchange Radio Network, Business
29:50
Speaker 1: and financial news affecting the markets and your wallet. We've
29:53
Speaker 1: got it all straight from Wall Street right here on
29:56
Speaker 1: the Financial Exchange Radio Network.
30:06
Speaker 3: Mike, let's talk a little bit about this piece of
30:08
Speaker 3: New York Times talking about how for small businesses, in particular,
30:12
Speaker 3: the move away from cash and towards more buyers purchasing
30:17
Speaker 3: products using credit cards is impacting their bottom line as hey,
30:22
Speaker 3: with more credit card transactions comes more fees that they
30:26
Speaker 3: have to pay to merchant networks your visas and master
30:29
Speaker 3: cards of the world, and so in a business where
30:32
Speaker 3: look margins are thinned, to begin with, if you got
30:34
Speaker 3: to be paying two to three percent to a Visa,
30:37
Speaker 3: MasterCard or Amex, it can really cause things to get
30:40
Speaker 3: tight for you in your bottom line.
30:41
Speaker 2: Yeah.
30:42
Speaker 4: I mean for many retailers, this is the single biggest
30:44
Speaker 4: line item that they end up paying on a year
30:47
Speaker 4: to year basis is those credit card transaction fees. And
30:50
Speaker 4: if you're a small you know, if you're Walmart, you
30:51
Speaker 4: can negotiate the hell out of this thing. If you
30:53
Speaker 4: are you know, the local toy shop in my town,
30:56
Speaker 4: then you just take the prices. I don't have any
31:01
Speaker 4: firm data on this, but I would be interested to see, Hey,
31:04
Speaker 4: what is the cash in store spend as a percentage
31:09
Speaker 4: of total sales in twenty nineteen compared to now.
31:13
Speaker 5: I don't even know who would.
31:15
Speaker 4: Track a data series like that, but you know, if
31:17
Speaker 4: you took a look at those two, I'd be very
31:19
Speaker 4: interested to see what portion of in store spending is
31:22
Speaker 4: occurring on a electronic means versus versus cash. And I've
31:27
Speaker 4: got to imagine it's I would bet that it's up
31:30
Speaker 4: double digit percentages compared to pre COVID and that is
31:34
Speaker 4: a that is a real trouble for these smaller stores
31:37
Speaker 4: that you know, we don't really have the sway with
31:42
Speaker 4: these credit card companies.
31:43
Speaker 3: And I'll tell you look at the financials from the
31:46
Speaker 3: credit card companies or from it's really the payment networks.
31:48
Speaker 2: Like that's what we're talking about here.
31:51
Speaker 3: Visa had revenue for trailing twelve months of thirty five
31:55
Speaker 3: point nine three billion dollars. Net income was nineteen billion.
32:00
Speaker 3: Like Visa sitting there like, oh, gr margins are too slim,
32:02
Speaker 3: Like their margins are like sixty percent plus MasterCard revenue
32:07
Speaker 3: twenty seven billion dollars, net income twelve billion dollars. Again,
32:10
Speaker 3: it's just a fat chunk of money, you know, coming
32:14
Speaker 3: in there right now. American Express slightly different in terms
32:17
Speaker 3: of you know, how they operate and everything, but still
32:19
Speaker 3: a payment network sixty four billion dollars. Net income is
32:23
Speaker 3: nine So again AMEX is a different model there, but
32:26
Speaker 3: there's still something there. But Visa's the biggest one out there.
32:30
Speaker 3: And again they're as close as you can be to
32:32
Speaker 3: printing money because you you can't run a retailer today, Mike,
32:36
Speaker 3: and no except Visa and not take Visa.
32:38
Speaker 4: Yeah, like that takes you out of the game entirely.
32:41
Speaker 4: By Barber Is the only one that can still do it.
32:44
Speaker 3: And that's because listen, I say this as you know,
32:48
Speaker 3: a proud bald man. But the day that I started
32:50
Speaker 3: shaving my head was the day that I realized, hey,
32:54
Speaker 3: barbers might have the best business going.
32:56
Speaker 2: Man. His hair always keeps growing. You always need to
32:59
Speaker 2: go back.
33:00
Speaker 4: So, in terms of legislation out there, there's been something
33:03
Speaker 4: proposed to require large banks that issue credit cards to
33:06
Speaker 4: enable at least two networks to process payments.
33:08
Speaker 5: With those cards.
33:10
Speaker 4: Look, I'm generally in favor of something that would promote
33:14
Speaker 4: more competition, but I keep going back to the same
33:16
Speaker 4: thing we've talked about before is if you want prices
33:18
Speaker 4: to come down, you gotta go INTI trust route, right Like,
33:22
Speaker 4: I'm unconvinced that saying okay, now my Capital one credit
33:26
Speaker 4: card is required to accept payment on Visa or MasterCard.
33:30
Speaker 4: Would that truly drive down prices at all? Or do
33:33
Speaker 4: we just have a duopoly here that is driving up
33:36
Speaker 4: prices and faces no competition and needs to be broken
33:39
Speaker 4: up in some way, shape or form.
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34:42
Speaker 3: Mike, Let's talk a little bit about what's going on
34:44
Speaker 3: at movie theaters. A Monster Monster holiday weekend for US
34:49
Speaker 3: domestic box office numbers four hundred and twenty million dollars
34:54
Speaker 3: estimated here in terms of the total gross, the vast
34:58
Speaker 3: majority of that coming from three films, ma Wana two
35:01
Speaker 3: which came out last week, Wicked, which came out the
35:03
Speaker 3: week before, and Gladiator two which came out the week
35:05
Speaker 3: before as well, but ultimately just some monster monster numbers
35:11
Speaker 3: here mind.
35:11
Speaker 4: Yeah, So ma Wana two now taking that one seed
35:13
Speaker 4: in terms of the best ever Thanksgiving holiday weekend sales
35:18
Speaker 4: previously was held by Frozen two and now ma Wanatu
35:23
Speaker 4: taking that title, and also on inflation adjusted dollars, it
35:26
Speaker 4: blows it out of the water. I think ma Wana
35:27
Speaker 4: two had sales of one hundred and twenty yeah, one
35:32
Speaker 4: hundred and twenty five million back in twenty nineteen. If
35:35
Speaker 4: you think about inflation over that period of time, what
35:37
Speaker 4: twenty five percent on one hundred and twenty five million.
35:39
Speaker 4: At two hundred and twenty one million for ma Wanato,
35:42
Speaker 4: this just blows it out of the water. So I
35:44
Speaker 4: used to have a good family tradition of going to
35:46
Speaker 4: the movie theaters on Thanksgiving Day. Actually we don't do
35:50
Speaker 4: that anymore, but kind of miss that. My kids don't
35:54
Speaker 4: get to do that, and we almost got them to
35:56
Speaker 4: ma Wanatoo this weekend, but we ended up on a
35:58
Speaker 4: We ended up on a.
35:59
Speaker 5: Train to the North Pole, which was far superior.
36:02
Speaker 2: Or anyway, how is the North Pole? Good? Long ride?
36:04
Speaker 5: But it was good.
36:05
Speaker 2: Yeah.
36:06
Speaker 3: I want to talk just a little bit more detail
36:09
Speaker 3: on this because Wicked is setting up in a position
36:13
Speaker 3: where you may be looking at a movie that ends
36:17
Speaker 3: up in the top ten overall all time in terms
36:20
Speaker 3: of box office gross.
36:21
Speaker 2: It's a stretch for it to get there, but.
36:23
Speaker 3: It's possible, just because the declines that it's seeing are
36:25
Speaker 3: pretty minimal. But this is one where the combination of
36:29
Speaker 3: a the word of mouth on it is fantastic. Use
36:32
Speaker 3: your solid Yeah, everything's kind of pointing in that direction.
36:37
Speaker 3: But for Saturday, just as an example, the weekly decline
36:40
Speaker 3: was about seventeen percent. A typical weekly decline for a
36:44
Speaker 3: movie is usually around thirty five to forty percent.
36:48
Speaker 2: Week over week.
36:49
Speaker 3: So when you're only declining, you know, in the mid
36:51
Speaker 3: to high teens, it sets you up for a potentially
36:54
Speaker 3: long box office run. Here, we'll have to see what
36:57
Speaker 3: Mawana two can do as well. Obviously it's got a
36:59
Speaker 3: bit of a head start with how big that opening
37:01
Speaker 3: week was, but you've got potentially just a monster run
37:05
Speaker 3: ahead on wicket heading into the winter here, so we'll
37:10
Speaker 3: see where it ends up going, but thus far really
37:13
Speaker 3: kind of minimal slowdown in terms of what you're seeing
37:16
Speaker 3: from it, and it has the potential to again. I
37:20
Speaker 3: think it's kind of a stretch maybe to end up
37:22
Speaker 3: as a top ten movie all time in terms of
37:24
Speaker 3: gross but you certainly have top twenty getting somewhere near
37:27
Speaker 3: that five hundred million mark being a possibility there. So
37:31
Speaker 3: a monster win for Universal on that and from a
37:34
Speaker 3: one to two look, Disney needed a little bit of help.
37:38
Speaker 3: They had had a little bit of a tough time
37:40
Speaker 3: with some of their releases, especially on the you know,
37:42
Speaker 3: the animation side, over the last couple of years.
37:45
Speaker 5: But they have two they've had two big ones this year.
37:47
Speaker 3: They've had two big ones now this year, so it's
37:49
Speaker 3: they they've started to hit again. So rumors of Disney's
37:54
Speaker 3: demise may be a little bit exaggerated, And actually there's
37:57
Speaker 3: gonna be three big ones for Disney. Remember dead Pooling
37:59
Speaker 3: Wolverine is too Oh I forgot about that. Yeah, So
38:01
Speaker 3: they think of the R rated movies, they're probably gonna
38:04
Speaker 3: end up with the top three movies this year. Despite
38:06
Speaker 3: all the talk and all those probably doing five hundred
38:08
Speaker 3: to seven hundred millions, so Disney studios are they're not dead.
38:13
Speaker 3: They're not Let's take a quick break here. We got
38:16
Speaker 3: more financial exchange coming up.