Hey Snackers,
New job posting alert: Chief Rodent Officer. NYC Mayor Eric Adams is seeking a “somewhat bloodthirsty” person to lead the city’s battle against millions of rats. The director of rodent mitigation could earn up to $170K/year. In the corporate rat race, that’s serious cheese.
Stocks rose for the week after the Fed indicated it’s on track to hike rates by half a percentage point in December, a cooldown from the last four “jumbo” hikes of 75 bps. On Friday, the November jobs report showed stronger-than-expected hiring and wage growth.
Crossing off the Xmas list… one Paw Patrol toy at a time. A record 197M Americans shopped between Thanksgiving and Cyber Monday, up 10% from last year. Spending hit $9.5B as folks splurged on everything from new MacBooks to Dyson Airwraps to “Encanto” dolls.
The consumer’s alive and well… but the clock is ticking. Investors keep a close eye on consumer spending because it makes up two-thirds of US GDP. In October, spending growth accelerated from September as inflation cooled slightly. Americans splurged on new cars, furniture, makeup, and eating out — a sign that discretionary spending’s still hot. But as inflation-adjusted “real wages” dip, shoppers are racking up debt to keep splurging:
Spending is a double-edged sword… It’s typically good for the economy, but it can exacerbate inflation (bad for the economy). Inflation is cooling, yet sustained levels of high spending could spell more trouble ahead. Last month, the US added a whopping 263K jobs while wages spiked. A hot labor market, coupled with high spending, could compel the Fed to keep hiking rates. With economists forecasting a 2023 recession, Americans could enter the next downturn with a lot less cash cushion than they had during the pandemic.
Khakis < stretchy chinos… As workers return to offices, they’re keeping their clothes casual. That benefits legging legend Lululemon, which has been expanding its work-leisure offerings for years. Lulu thrived in the pandemic as loungewear became the norm everywhere. The good times stretched on in the September quarter as Lulu’s sales and profits beat expectations (again). Lulu also boosted its outlook in September, but we’ll see whether shoppers are still splurging on lavishly priced Lulu fits when it reports Thursday.
Tomato bisque FTW... While the market has tanked, Campbell Soup stock is up 25% this year. The 153-year-old canned-soup icon has been on a pandemic streak ever since people started hoarding its pantry staples (snacks like Goldfish and Snyder’s make up over half its sales). In Campbell’s last reported quarter, sales were up 6% — impressive considering its soup sales had fallen for eight of the nine years up to 2020. Big food companies like Kellogg, Pepsi, and Kraft have also outperformed. We’ll see if Campbell’s soup is still hot when it reports Wednesday.
Yellen from the mountaintops… for tougher crypto regs. Last week Treasury Secretary Janet Yellen said that FTX's collapse — and the loss of billions in customer funds — made crypto regulation urgent. Last week the Senate held a hearing on FTX with Rostin Behnam, chair of the Commodity Futures Trading Commission, who testified that his agency needs Congress to give it power to prevent future crypto calamities. The twist: Behnam's pushing for a bill (the Digital Commodities Consumer Protection Act) once promoted by then-FTX CEO Sam Bankman-Fried.
Yes cap… On Friday, EU countries agreed to cap the price of Russian crude at $60/barrel. The cap sets a max purchasing price on Russian oil to hurt the Kremlin’s income, which is fueling its war on Ukraine. As of today, the EU will also ban seaborne imports of Russian oil (though pipelines will keep flowing). The cap might not be very effective, though, since China and India, the biggest buyers of Russian oil, don’t seem inclined to support it. Meanwhile, Russia has said it won’t sell oil to countries who implement a cap. That could exacerbate the winter energy crunch.
Authors of this Snacks own: shares of Amazon, Netflix, Spotify, and Walmart
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