· Hello, this is James Mayer, Branch Manager, from the Huffman Mayer Wealth Management Group of Wells Fargo Advisors. Tis the season to be jolly. We certainly hope you all had a jolly Thanksgiving. We are excited to share with you November’s edition of “The Market Recap”. Stay tuned at the end we have a few special guests, but for now let’s see what Phil has to say about November.
PHIL: Thanks James!
· According to FactSet, 3Q23 earnings results are headed higher for the S&P 500. With 94% of companies reporting, 82% have exceeded earnings expectations, and 62% have exceeded sales expectations. While this looks like the first quarter of EPS growth since 3Q22, all is not positive. S&P 500 companies issuing lower earnings guidance outnumber those issuing higher guidance by a ratio of 2 to 1 (64 companies vs. 32, through November 17, 2023).
· According to data from the Bureau of Labor Statistics, October CPI came in at 3.23% for all items, and 4.02% for “Core” items (which excludes the cost of food and shelter). The data release shows that while many categories are now falling on a year over year basis, inflation on “food away from home” is still running high, at 5.4% y/y. Likewise, the cost of shelter (cost of a primary residence, whether rented or owned) increased 6.7% y/y. While this is an improvement versus most of 2021-2022, it is still roughly twice the average rate of inflation from 2008-present for the less volatile “core” categories.
According to a recent report from McKinsey & Company1, the percentage of U.S. consumers who intend to “splurge” on Christmas (a term which the survey allows respondents to define for themselves) fell from 39% in 2022 to 35% in 2023. The survey also showed that discounts will be a more important factor for consumers in 2023, with 66% reporting that “better prices and promotions” would be a factor in their buying decisions, compared with 59% in 2022. While it is still too early to gauge holiday sales for 2023, these data points suggest that retailers face some headwinds amid a backdrop of depleted savings and poor consumer confidence.
1 – McKinsey.com, “U.S. Holiday Shopping 2023: Consumer Caution and Retailer Resilience”, accessed 11/27/23.
Third quarter 2023 EPS are coming in better than expected, with 82% of companies exceeding expectations. That said, lower EPS guidance exceeds higher guidance by a ratio of 2 to 1. CPI continues to decline for both “core” and all-items readings, but inflation remains high relative to its average over the last 15 years. A recent McKinsey & Co. survey shows consumers are more focused on discounts and less likely to “splurge” for Christmas 2023 versus last year, which could serve as a drag in 4Q23.
Now let’s see who our special guests are.
Ryan: Hi Everyone, its Ryan.
Charleigh: Hi I’m Charleigh!
Ryan: And here we have the newest addition to our family, Palmer Rose. 2023 was a roller coaster for Palmer and our family, but we’re excited to celebrate the Holidays and Palmer’s First Christmas. Charleigh and I would like to share some “Did you Know” fun facts about Christmas. Charleigh, you’re up first.
· Charleigh: Did you know that 3 billion Christmas cards are sent in the U.S. each year.*
· Ryan: Did you know that Christmas trees have been sold in the U.S. since 1850.*
· Charleigh: Ryan how long does it take to grow the average Christmas tree?*
· Ryan: How long Charleigh?
· Charleigh: 15 years!*
· Ryan: Did you know that President Teddy Roosevelt, an environmentalist, banned Christmas trees from the White House in 1901.*
· Charleigh: I bet you didn’t know that Holiday purchases account for one sixth of all yearly retail sales in the U.S.*
· Ryan: And for our last fun fact - “White Christmas” by Irving Berlin is the best-selling single record of all time, with over 100 million sales, worldwide.*
A big thank you to all of you who sent thoughts, prayers, cards, and well wishes as we were preparing to meet Palmer. And our family wishes you the best of Holiday Seasons. Remember to keep Christ at the center of Christmas, and we hope you and your family have a healthy and prosperous 2024! Merry Christmas!
JAMES: That’s awesome, glad we all can finally meet Palmer Rose. We hope you all have a wonderful holiday season and an even better new year.
We always want to talk with you. If you feel you know someone who would enjoy this video, please feel free to send them the link.
As always stay happy, safe, and healthy and hopefully we will see you very soon.