🦎 Is The GEICO Gecko British or Australian?

Plus, this city now has more finance workers than Chicago or Los Angeles and trails only New York

Happy Wednesday afternoon to everyone on The Street. Here's a snapshot of where markets ended the trading session, plus tomorrow's trade idea delivered to you today.

  • 🟥 | US stocks fell Wednesday. Minutes from the Fed's December meeting showed that officials aren't so sure about their interest-rate projections and therefore did not rule out further rate hikes. Also, remember the Apple downgrade yesterday? That negative momentum weighed on the Nasdaq and ultimately the entire market. See heatmaps below.

  • 📈 | One Big Gainer: Eli Lilly (+4%). The company wrapped up its $1.4 billion takeover of Point Biopharma at the end of December. Bank of America also named Eli Lilly a top pick in the new year saying the company is “well positioned to weather competitive threats.”

  • 📉 | One Big Decliner: Enphase Energy (-6.6%). Other solar stocks traded lower today as well after the 10-year Treasury briefly topped 4%.

  • 🦎 | Tomorrow's Trade: Why we might see more GEICO and Progressive commercials this year. Scroll down for more.

S&P 500 Heatmap. Credit: Finviz.

All stocks listed on US stock exchanges. Credit: Finviz.

Foreign ADR stocks on NYSE, NASDAQ, AMEX. Credit: Finviz.

MARKET MOVERS

XRX: Xerox shares fell more than 12% after the company announced plans to cut 15% of its workforce.

SOFI: Shares of SoFi slid over 13.9%. Keefe, Bruyette & Woods downgraded the stock due to recent outperformance and worries that earnings might be pinched due to slower origination growth.

SCHW: Charles Schwab shares sank 3% after a Goldman downgrade. Goldman thinks lower rates could put downward pressure on earnings.

PGTI: PGT Innovations stock popped 3.65% after an unsolicited offer from Miter Brands valuing the company at $41.50 per share in cash, surpassing the prior $41 per share deal with Masonite International.

TOGETHER WITH MONEY

Safeguarding your retirement with a Gold IRA can help you shield your wealth from market shifts, economic uncertainty, and inflation. And with gold’s value projected to increase in 2024, now is a good time to invest. Planning for retirement involves more than saving, so fortify your portfolio with gold today and plan for a better tomorrow.

OVERHEARD ON THE STREET

WSJ: During the third quarter of 2023, big landlords that own anywhere from 100 to more than 1,000 housing units purchased just 1% of all the homes sold in the U.S. This is down from roughly 3% throughout 2022, according to data from John Burns Research and Consulting.

Sportico: According to DraftKings, revenue from legal sports betting in the US jumped 50% in 2023, growing to $20 billion. That figure is projected to double by 2028 to $40 billion. 

FT: Blackrock lost ETF market share in 2023. "BlackRock’s iShares managed about 32 percent of the US ETF market as of November. That compared with 33.7 percent in late 2022 and was down more than 7 percentage points from the end of 2018, when the $9.1tn asset manager controlled nearly two out of every five dollars invested in US ETFs, according to data from Morningstar Direct."

Crain Currency: Dallas, Texas now has more finance workers than Chicago or Los Angeles and trails only New York.

Yahoo! Finance: Fidelity has marked down its value of Twitter shares by some 70%.

TOMORROW’S TRADE IDEA, TODAY

Wave Hello GIF by Progressive

Quick question for you: when was the last time you saw Flo from Progressive or the Geico Gecko? (Also, is the Gecko British or Australian?)

Sure, you probably remember seeing them recently. But if you think about it, have you seen them as much as you used to? Whether you realize it or not, you probably saw them less in 2023. That’s because many home and auto insurers had to scale back their marketing budgets due to skyrocketing claim costs. 

That could change this year, however. In fact, according to the Wall Street Journal, “it wouldn’t be a shock to see Flo a bit more in 2024—as well as flows into stocks such as Progressive.”

Better Margins

There are two reasons Flo might infiltrate our daily lives more this year.

  • First, on the expense side of the ledger, car repair costs are slowing. In November, the Consumer Price Index (CPI) for car repairs increased by 13% compared to the previous year, marking the slowest increase since the summer of 2022.

  • Secondly, while the cost of repairs is slowing slightly, car insurance has continued to rise. The CPI for motor vehicle insurance is up 19% year-over-year. 

If income is up and expenses are down (or at least leveling off), this means better margins for car insurers. 

More Flo for 2024

In the third quarter, Progressive openly acknowledged that its strong performance in 2023 was a result of reduced marketing expenses and fewer new business initiatives. If the company did end up hitting its 2023 underwriting targets, it might be able to ramp up its advertising spend to drive more growth this year.

Progressive is scheduled to report earnings on January 24th. Allstate should report in the first week of February. Mark these calls on your calendar to see if we can expect more Flo and Mayhem on our screens this year and if shares of both companies have more room to run. 

A MESSAGE FROM OUR PARTNERS

Interest rates are at 22-year highs, but you can take advantage of them. With rates hovering around 5%, high-yield savings accounts present an opportunity for substantial returns through compound interest. Offering up to 10 times the return compared to regular savings accounts, these accounts are ideal for short- and long-term goals.

ON OUR RADAR

BBG: Wages offered to Chinese workers in major cities declined by the most on record. 

Yahoo! Finance: S&P 500 earnings are expected to increase 11.1% overall in 2024 after rising a modest 3.1% last year, according to estimates compiled by LSEG.

BBC: UK supermarkets experienced their busiest Christmas period since before the pandemic, according to research firm Kantar.

CNBC: Inflation in Turkey rose to 64.8% on an annual basis in December, an acceleration from 62% in November.

WSJ: At least five luxury home deals closed for $100 million or more in 2023, down from seven in 2022, according to data from real-estate appraisal firm Miller Samuel and The Wall Street Journal’s reporting. Beyoncé and Jay-Z’s $190 million Malibu buy topped the charts.

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