Learning From S&P 500 Results for YTD Period Through 7/19/23

Jul 20, 2023 | Bubble Monitor, No Bull Economics

Weekly Dashboards

This week’s posts tell a story about the struggles of middle-income consumers which contrasts with the free spending of wealthier consumers with a travel bug. The question for the markets is whether spending support from higher-income consumers can outweigh the malaise of middle America and judging by the performance over the last week, the jury is still out.

Commentary

Investors thrilled about the prospect of a soft landing and an eventual cessation of rate hikes pushed stocks through the roof so far through the summer of 2023. Imagine what these bullish results would have looked like if bank stocks had not been roiled by such aggressive rate hikes.

Is it possible that AI trading algorithms pushed the AI related stocks (semiconductors, software & Meta) into the stratosphere? Is there a conflict of interest?
Notably, a rebound in the travel bug this summer helped boost the cruise, hotel and airline stocks (Delta 2Q23).

Weekly Publications

Public Posts

Part 1: How to Value a Stock?

Part 2: Using Financial Forecasts in Valuations

Do we Count People Collecting Disability as Unemployed?

Premium Posts

Delta Air Lines 2Q23: Wealthy Ramp-Up Spending on Travel

Pepsi Co. 2Q23: Consumers are Shopping for Deals

Conagra Brands, Inc. Fiscal 4Q23: Consumers are Hunkering Down

BlackRock, Inc. 2Q23: Countries Spending All They Have on Net Zero

Yum! Brands Global: Plans to Open Another 100k Restaurants

← BlackRock, Inc. 2Q23: Countries Spending All They Have on Net Zero Learning From S&P 500 Results for YTD Period Through 7/19/23 →

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2Q23 Retail Same Store Sales

NoBull’s Retail Same Store Sales Report benchmarks 80+ large consumer retail companies by domestic same store sales including annual (2019 – 2022) and quarterly results (2Q22 to 2Q23).

Walmart Investor Presentation: Inflation Here to Stay

While general merchandise prices are lower y/y, they remain elevated compared to 2 years ago. As Walmart does not believe general merchandise and food (dry grocery) & consumable prices are ever going to completely disinflate, management suggests the need for a country-wide wage increase rebalancing.

Interesting Conversation with Fed Chair Powell

Okay, Powell didn’t actually take our call, but we offer a transcript of a potential discussion between the Fed Chair and John Q. Public. It’s very insightful, so please read on.

The Problem with Investment Diversification

Every investment advisor and business student knows that portfolio diversification is key to wealth building. Show me an investor who can beat the S&P 500 Index by buying a few handpicked stocks and I will show you a hedge fund manager in the making. However, there is a huge problem with this strategy that no one is talking about.

Part 3: Analyzing Performance of Low-Income Oriented Retail Companies

We created an index for the financial performance of 5 low-income oriented retail companies to assess the health of this demo. While we recognize that these companies have benefited from the trade-down of higher-income consumers, things look reasonable at least through calendar 2Q23.

Part 2: Incremental Interest Payments Squeeze Disposable Income

In this post, we quantify the pressure on disposable income driven by credit card & auto loan payment increases since the onset of the Fed rate hikes in early 2022 in addition to the impact of the coming resumption of student loan payments in October 2023.

Part 1: Keeping an Eye on the Consumer’s Top-Line

The consumer’s top-line benefits from a high employment rate, generous raises, and a healthy savings rate which indicates an income surplus.

Teenage Wasteland No More

The American youth (15 – 24-year-old) unemployment rate makes our country look downright productive compared to the rest of the world!

The Fight for Global Manufacturing Gets Personal

Post-covid U.S. exports of goods & services have skyrocketed as American companies have worked hard to onshore their supply chains, providing them with products to sell overseas. Correspondingly, U.S. imports from China have fallen considerably since late 2022 after China’s extended covid lockdowns left their American customers without product to sell.

China’s Deflation Looks Pretty Good Compared to U.S. Inflation

While the U.S. has been suffering from severe post-covid inflation, China’s prices have been spiraling lower. What’s up with that?

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