· Hello, this is James Mayer, Branch Manager, from the Huffman Mayer Wealth Management Group of Wells Fargo Advisors. We hope you enjoyed the time spent with your loved ones during the holidays. We are excited to turn the page on 2023 and start 2024 with positivity. We appreciate you tuning in for December’s edition of “The Market Recap”. Let’s see what Phil has to say.
Thanks James
· According to data from FactSet, the Consumer Discretionary sector is expected to report the highest year-over-year (y/y) EPS growth rate of all eleven sectors at 43.9%. At the company level, Amazon (AMZN) is the largest contributor to earnings growth for the sector. If it were excluded, the estimated EPS growth rate for the Consumer Discretionary sector would have fallen to 16.2%, meaning that it accounted for about 60% of industry level growth. The worst performer in the sector has been Starbucks (SBUX), down 0.3% through December 15th. The Energy sector is expected to report the largest y/y earnings decline at -29.0%. Lower y/y oil prices are contributing to the decrease in EPS for the sector. The average price of oil in 2023 is 18% below the average price for oil last year.
· According to Central bank data, in the space of about two months, 10-year treasury interest rates among major global economies have unwound about 30% of the rate hikes from the prior 22 months. For the four countries referenced, rates peaked in the UK on 8/17, Canada on 10/3, Germany on 10/4, and the USA on 10/19. Since hitting those high-water marks, the UK has undone 28% of the increase from 1/1/22 to peak, Germany 29%, the USA 31%, and Canada 38% of the prior increase.
According to data from the Conference Board, U.S. consumers expect to spend $654 on average on Christmas gifts this year, a 6.6% increase from last year’s $613. This is slightly better than the National Retail Federation’s estimate that Christmas spending would increase between 3-4% in 2023. However, other categories of spending are expected to decrease, with spending on “all holiday related items” expected to fall to $985 on average, a 2% decline vs. 2022.
In Summary:
· Per FactSet data, the Consumer Discretionary sector is expected to grow EPS the fastest of any sector in 4Q23, at 43.9%, with roughly 60% of that having been contributed by Amazon (AMZN) and with Starbucks the worst, down 0.3% YTD. The Energy sector is expected to see EPS contract by 29%.
· According to Central bank data, 10-year rates in the USA, UK, Germany and Canada on average have undone 30% of the rate hikes that occurred from the beginning of 2022 until their respective peaks from August-October of this year.
· The Conference Board expects spending on gifts to grow 6.6% this Christmas, compared with a 3-4% growth rate expected by the National Retail Federation. Non-gift spending is expected to decline, leading to a 2% decline in spending on all holiday related items.
Now let’s see what James and Ryan have to say about the New Year!
James: Ryan, did you know that 66% of Americans set financial goals as a New Year’s resolution?*
But only 9% actually follow through with their resolution.**
Ryan: Wow, James! Thank you for sharing that information. I think that highlights the difficulties and challenges to sticking to your Investment plan and goals.
James: Absolutely, maintaining financial discipline can be difficult, especially with the unexpected hurdles that life throws our way. What are your best tips to help families achieve financial success?
Ryan: I think it all starts with defining your financial goals and what you want to save for. Without a clear vision and plan, planning for retirement can feel overwhelming.
James: Thanks, Ryan!
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