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- 🎰 Betting Against The House in 2024
🎰 Betting Against The House in 2024
Plus, shrinking more than just waistlines and shorting criminals.
Happy Sunday to everyone on The Street.
Consumers continue to be resilient despite abounding economic uncertainty, as underlined by online Black Friday sales data released by Adobe Analytics.
A record $9.8 billion was spent online on Black Friday, marking a 7.5% year-over-year increase, Adobe Analytics’ report showed. The major driver of growth was electronics, up 152% from the average daily sales in September. Among electronics, smartwatch, TVs and audio-equipment sales jumped 577%, 484% and 376%, respectively.
As inflation continues to eat into real incomes, consumers apparently tapped into borrowing capital to splurge on items. The report showed that they increasingly relied on the flexible payment method, “Buy Now, Pay Later,” to stretch their holiday budgets.
BNPL orders rose by 72% in the Nov. 18-24 week compared to the Nov.11-17 week, and BNPL revenue climbed $79 million or 47% over the same period.
Stocks in focus based on the trends above include Affirm Holdings, Apple, Block, and PayPal, which offer payment services.
Among the bestsellers on Black Friday were toys including KidKraft playsets, Mattel Barbie Fashionista dolls, and Mini Brands Toys. Incidentally, Mattel has seen a strong lift from the box office success of the “Barbie” movie released in late-July.
Gaming also remained a popular category, with strong demand for Sony Group Corporation’s PlayStation5, Microsoft Corp.’s, Xbox Series X, Nintendo Co., Ltd.’s, Switch gaming consoles, along with games including “Call of Duty: Modern Warfare III,” “Spiderman 2” and “Super Mario Bros. Wonder.”
Other top sellers included Bluetooth headphones, smartphones, skin care products, cookware sets and coffee makers.
PRESENTED BY KNIGHTSCOPE
It’s a strange world out there ladies and gentlemen. The aftermath of the pandemic has seen an increase in violence in certain areas of the country and internationally. Meanwhile, police violence and racial discrimination are escalating. With that said, there are companies aiming to solve this problem.
Enter Knightscope: A pioneering public safety firm, Knightscope (NASDAQ: KSCP), introduced innovative AI and robotics, mitigating crime and human error in law enforcement.
With notable successes in reducing crime by 46%, their Autonomous Security Robots are gaining traction. Recent contracts with major corporations and diverse industries showcase their impact.
The company is currently offering an investment opportunity for interested parties to buy bonds. This includes 10% interest, paid in cash annually, on up to a 5-year bond. This won’t last forever though. Click here to short the criminals.
Review
Wall Street marked its fourth consecutive week in the green, despite reduced investor activity during the Thanksgiving holiday week.
The major U.S. stock indices are steadily approaching their all-time highs: The S&P 500 index is now just 6% away from its January 2022 peak of 4,818, while the Nasdaq is approximately 5% below its November 2021 high of 16,764.
Microsoft reached a historic high of $377 per share during Wednesday's trading session. This remarkable performance adds to the tech giant’s outstanding year, with the stock boasting a year-to-date gain of 57%, reminiscent of its glory days in 2009 and even reaching returns not seen since 1999.
Speaking of Microsoft, Sam Altman is set to resume his role as chief executive officer of OpenAI shortly after being dismissed just a week earlier.
There were no major surprises in the latest Federal Reserve minutes, with policymakers signaling that interest rates are already restrictive. The Fed indicated the need for further evidence of a decline in inflation. Markets have completely ruled out the possibility of a rate hike in December and are anticipating four rate cuts in 2024.
Overall, U.S. private sector activity remained unchanged in November. A sharper-than-expected decline in manufacturing was counterbalanced by a more positive surge in services, surpassing expectations, as indicated by the S&P Global PMI. On the downside, employment is beginning to contract, but on the upside, price pressures are easing, aligning with a return to the Federal Reserve’s 2% target.
NVIDIA delivered third-quarter results that exceeded expectations and provided robust revenue guidance for the fourth quarter on Tuesday. In response, several analysts on Wall Street raised their price targets for the semiconductor giant.
Preview
Economic Spotlight
Thursday
Personal Consumption Expenditure, the Fed’s favored inflation gauge. Economists expect a drop from 3.4% to 3.1% in the annual rate.
Personal Income and Spending Data
Friday
Manufacturing PMI
Fed Chair Jerome Powell will provide remarks at Spelman College in Atlanta.
Earnings Spotlight
Monday
ZScaler Inc. (ZS) will be the focus.
Tuesday
A busy day with earnings from Intuit Inc. (INTU), Workday Inc. (WDAY), CrowdStrike Holdings Inc. (CRWD), Splunk Inc. (SPLK), and Hewlett Packard Enterprise Co. (HPE).
Wednesday
Tech & Retail Significant reports from Salesforce Inc. (CRM), Synopsys Inc. (SNPS), Snowflake Inc. (SNOW), and Dollar Tree Inc. (DLTR).
Thursday
Marvell Technology (MRVL), Kroger Co. (KR), and Ulta Beauty Inc. (ULTA).
Rebuilding Busted Banks
Old Bank, New Business
First Citizens BancShares (FCNCA), a regional bank based in North Carolina, has seen its stock pop more than 76% this year. That YTD return is better than Apple’s, Google’s, and Amazon’s over the same time period.
The bank’s acquisition of failed Silicon Valley Bank has catalyzed this growth. First Citizens has a history of purchasing failed banks, doing numerous deals with the FDIC over the years.
With its purchase of SVB, First Citizens now has a seat at the tech table. Analysts believe that First Citizen’s shares are undervalued relative to its positioning and potential.
Moving up in the World
Currently, First Citizens is the nation’s 15th largest bank, controlling approximately $209 billion in assets. And now it has a stake in the tech industry.
With exposure to venture capital and start-ups, First Citizens is now open to new lending opportunities.
The biggest question moving forward will be whether SVB will be able to repair its reputation and gain back industry trust. However, First Citizens seems committed to reviving SVB.
Riding the Waves
High interest rates are leading to a huge dropoff in lending. As inflation slows, private lending will see an increase. SVB will once again seek to provide funding to the tech industry. Analysts believe this puts First Citizens stock in a unique spot to ride a future upswing.
The bank is expected to grow its tangible book of business by 13% over the next year, beating out the competition.
As we move into the new year, First Citizens stock could present an interesting opportunity for investors as borrowing rates begin to fall.
Are you bullish or bearish on First Citizens (FCNCA) over the next 12 months? |
Betting Against the House
Eyes on Big Tech
Wall Street has a simple playbook for 2024. The consensus expects lower rates and a soft landing in the U.S. as inflation continues to weaken. But if the suits get it wrong, investors who take a different approach could get a nice payday.
BofA says one way to deviate from the crowd is to short the Nasdaq-100. The ETF ProShares Short QQQ (PSQ) is one way to bet against the tech-heavy index. The fund has taken it on the chin in 2023, falling over 30%, as Microsoft (MSFT), Meta (META), and Amazon (AMZN) have soared this year.
A survey from Bank of America found “long large cap tech” as the most crowded trade. If the tech giants fail to meet investors’ lofty expectations, they could hit some bumps in 2024.
Joy to the World?
The street anticipates geopolitical risks to stay high through next year.
Continued global tension is expected to keep oil prices at elevated levels, but if the world calms down in ‘24, energy could tumble.
Bank of America sees shorting oil as a play for the gutsy contrarian. ProShares UltraShort Bloomberg Crude Oil ETF (SCO) gives investors exposure to that trade.
Roll the Dice on Inflation
Forecasters believe the worst of inflation is in the past, with just 6% of fund managers seeing inflation increasing in 2024.
However, if inflation proves to be stickier than expected, a savvy investor could reap the rewards. BofA highlights Treasury Inflation-Protected Securities as a way to wager on higher consumer prices. The fund iShares TIPS Bond ETF (TIP) offers that exposure to investors.
Wall Street forecasters offered muted expectations for 2023, only to see the major indexes roar back. If the street misses again in 2024, contrarians will walk away with some nice gains.
Which trade will have the most success in 2024? |
PRESENTED BY KNIGHTSCOPE
It’s a strange world out there ladies and gentlemen. The aftermath of the pandemic has seen an increase in violence in certain areas of the country and internationally. Meanwhile, police violence and racial discrimination are escalating. With that said, there are companies aiming to solve this problem.
Enter Knightscope: A pioneering public safety firm, Knightscope (NASDAQ: KSCP), introduced innovative AI and robotics, mitigating crime and human error in law enforcement.
With notable successes in reducing crime by 46%, their Autonomous Security Robots are gaining traction. Recent contracts with major corporations and diverse industries showcase their impact.
The company is currently offering an investment opportunity for interested parties to buy bonds. This includes 10% interest, paid in cash annually, on up to a 5-year bond. This won’t last forever though. Click here to short the criminals.
Shrinking More Than Just Waistlines
A Different Outlook
Ozempic, the popular weight loss drug, could have a devastating effect on gyms across the country. However, some analysts believe it could have the opposite effect.
Ozempic, one of the new GLP-1 drugs, is more effective than previous weight loss drugs, and with fewer side effects. Many investors believe its explosion onto the market will result in fewer Americans seeking out gyms as a way to lose weight.
However, some analysts and CEOs see it differently. They believe the drug could be a tailwind for healthier choices and future growth.
A Temporary Solution
Ozempic is useful for temporary weight loss, but it’s not a permanent solution. When patients stop using the drug, they’ll have to continue making healthy choices to keep the weight off. This is where analysts believe gyms will benefit from the popularity of the drug.
Additionally, when using the drug, patients historically lose some muscle mass. To rebuild muscle, many choose to begin weight training alongside their Ozempic dosages.
As a result, more and more trainers are reporting clients who are seeking out fitness programs specifically designed to be coupled with Ozempic. This trend is expected to continue, and many gyms are now offering these types of programs to their customers.
Wait and See
Planet Fitness (PLNT) has seen its stock price drop more than 16% in 2023. However, during the same period, Life Time Fitness (LTH) has seen a 20% upswing.
Bank of America isn’t worried about Ozempic’s effect on gyms, having raised their outlook on Planet Fitness in October and again in November. Currently, BofA lists Planet Fitness stock as a “buy” with a price target of $75, representing a 15% increase.
The drug's full effects on the industry remain to be seen, and investors will be watching closely.
Are you bullish or bearish on Planet Fitness (PLNT) stock over the next 12 months? |
Last Week's Poll Results
Are we heading towards a consumer-driven recession in 2024?
🟩🟩🟩🟩🟩🟩 👍Yes
🟨🟨🟨⬜️⬜️⬜️ 👎No
Are you bullish or bearish on Copart (CPRT) over the next 12 months?
🟩🟩🟩🟩🟩🟩 🐂 Bullish
🟨🟨⬜️⬜️⬜️⬜️ 🐻 Bearish
Which stock do you think will perform the best this holiday season?
🟩🟩🟩🟩🟩🟩 Hormel (HRL)
🟨🟨🟨🟨⬜️⬜️ Diageo (DEO)
🟨🟨🟨🟨🟨🟨 Dollar General (DG)
Which of First Trust Water ETF’s holdings do you think will generate the best returns over the next 5 years?
🟩🟩🟩🟩🟩🟩 Roper Technologies (ROP)
🟨🟨⬜️⬜️⬜️⬜️ Ferguson PLC (FERG)
🟨🟨⬜️⬜️⬜️⬜️ Ecolab (ECL)
Join the conversation