Yesterday, the S&P 500 finished fractally lower, and the NASDAQ Composite had a strong session, fending off waves after waves of pressure. The excitement was outside the major indices with recent Initial Public Offerings (IPOs). And Software-as-a-Service (SaaS) cloud names had monumental sessions.
Market Breadth | NYSE | NASDAQ |
Advancing | 1,663 | 2,285 |
Declining | 1,448 | 1,364 |
52 Week High | 178 | 236 |
52 Week Low | 3 | 16 |
Up Volume | 2.90B | 3.09B |
Down Volume | 1.77B | 1.42B |
Meanwhile, blue-chip buyers remained focused on Energy names, as West Texas Intermediate (WTI) continues to make major strides. Crude oil is up 31.2% since November, and might only just now be breaking out.
Big Bucks Stacking Up
After plunging in the first quarter, U.S. household wealth has boomeranged back to a new record high:
- $140.3 trillion assets
- $16.8 trillion debt
- $123.5 trillion net household wealth
During the third quarter, American households enjoyed a $3.82 trillion increase in their net worth, powered by the big move in stock prices. The moral of this story is you have to own stocks because eventually, they will move higher and they can change your life:
- +$2.76 trillion: stocks
- +$430 billion: real estate
- +$33 billion: debt
- +$593 billion: (other)
To see the chart, click here.
Airbnb
Another successful IPO has tongues wagging about market tops. These are individual stories, mostly about a shift in American life. We are doing lots of things differently, including how we vacation, and where we stay when we go out of town.
I think about hotels when I’m going somewhere, but my 24-year-old son thinks of Airbnb (ABNB).
When you think about it, “new” ideas like delivering food, renting out your home, and even electric vehicles are not new business models. The thing is technology allows them to be more efficient, and therefore, more attractive. The ABNB stock was priced at $68 and finished its first day of trading at $144.71 per share.
A remarkable debut - in a remarkable year.
Portfolio Approach
We added to Healthcare yesterday morning, and sold a stock in Material this morning in the Hotline Model Portfolio.
After the Close
There was lots of news after the close from big household names will influence today’s session.
Disney (DIS) hosted its Investor Day 2020 with a big headline: 86.8 million streaming subscribers.
LuluLemon (LULU)
- Revenue beat the Street: +22%
- Earnings beat by $0.68
- Comp-store +18% against the consensus of +4.3%
- E-commerce +93% = 45% of the total revenue
- Women: +33%
- Men: +14%
- Direct-to-consumer: 43% of the total revenue
Costco (COST)
- Slim beat on revenue of $43.21 billion
- Earnings of $2.29 against the consensus of $1.93
- Comp-store: +17.1%
- U.S. comp: +17.0%
- E-commerce: +86.2%
- Membership fees: +7.1%
Today’s Session
Major indices are pointing to a lower open. Congress continues to fail to see the urgency of a stimulus deal. On the vaccine front, the FDA approved the emergency use of Pfizer (PFE) and BioNTech’s (BNTX) Covid vaccine.
However, in Europe, Sanofi (SNY) and GlaxoSmithKline (GSK) Covid vaccine will be delayed till the end of 2021. Trials had an insufficient response in elderly people. In addition, a Brexit deal between the UK and EU looks to be teetering.
Here at home, PPI rose just 0.1%, in-line with consensus. On a year-to-year basis, PPI rose 0.8% beating consensus 0.7%. Core PPI rose 1.5% y/y, beating consensus 1.4%. All eyes are on the University of Michigan Consumer Sentiment, which is out at 10am ET.