February Well-th Notes

By VWG Wealth Management on February 6, 2024

Data-driven insights on the markets and economy

1. Shop ‘Til You Drop
   U.S. retail sales rose more than expected in December, increasing 0.6%, boosted by increases in motor vehicle and online purchases. Motor vehicle sales rose 1.1% and online sales rose 1.5%. Excluding automobiles, gasoline, building materials and food services, retail sales jumped 0.8% in December. The Atlanta Fed raised its GDP growth rate forecast from 2.2% to 2.4%.

2. Dimon’s Disinterest
Bitcoin is trading about $42,700, up more than 100% in the past year. The SEC approved the creation of bitcoin ETFs, cementing it as an asset class. BlackRock, Franklin Templeton and WisdomTree launched their own spot bitcoin ETFs last week. Analysts anticipate fund inflows between $50 billion to $100 billion in 2024. When asked what he made of the topic, long-time bitcoin critic and JPMorgan Chase CEO Jamie Dimon said, “I don’t care. So just please stop talking about this…”[i]

3. Hoodwink Gone Wrong
A 26-year-old man from Hampshire in southern England has been sentenced for defrauding eBay buyers by attempting to sell what he claimed was a walking stick used by Queen Elizabeth II. The man claimed he was a senior footman at Windsor Castle and that the proceeds from the sale of the “antler walking stick” would go to cancer research. The auction had reached 540 pounds ($686) before he cancelled the listing after learning police had launched an investigation.[ii]

4. Making Moves

Blackstone has made two interesting moves in the past weeks. Its CEO Stephen Schwartzman said that data from his portfolio companies suggest that inflation is already near 2%, rather than the government’s report of 3.4%.[iii] Blackstone also announced that it is taking Canadian real estate firm Tricon Residential private for $3.5 billion, leading U.S.-listed shares of Tricon to jump 28%. After the acquisition, Tricon plans to complete its $1 billion development pipeline of new single-family rental homes in the U.S. and $2.5 billion of new apartments in Canada.[iv]

5. Walking on Sunshine
U.S. consumer sentiment has made its biggest two-month jump since 1991, according to the University of Michigan’s Survey of Consumers. The consumer sentiment reading was 78.8 for January, its highest level since July 2021, up 21.4% from a year ago. Meanwhile, inflation expectations for the coming year fell to 2.9% from 3.1% in December, the lowest since December 2020. Analysts say lower gas prices and a stock market rebound helped boost the mood.[v]

6. Murky Waters

The number of vessels passing through the Suez Canal and Panama Canal have dropped 50% from normal levels, according to Apollo’s Chief Economist Torsten Slok. The number of ships traveling through the Suez Canal has dropped from 200 to 100 per week, and the number of ships traveling through the Panama Canal has dropped from 90 to 45 per week. Higher transportation costs are putting upward pressure on goods inflation.[vi]

7. Mind the Gap
The market capitalization of the U.S. stock market is now a record $38 trillion greater than that of Hong Kong and China put together. While U.S. stocks have hit record highs, Chinese stocks have lost more than $6.3 trillion in market value from the peak in February 2021. During this same time period, U.S. stocks have gained $5.3 trillion.[vii]

8. Applebee’s Golden Ticket
Applebee’s yearlong subscriptions for the $200 “Date Night Pass” sold out within minutes of becoming available. The passes included up to $30 of food and non-alcoholic beverages per use and are valid 52 times between February 1 and January 31, 2025. When all 52 discounts are redeemed, the pass has a value of roughly $1,500.[viii] The lucky subscribers are going to be “eatin’ good in the neighborhood.”

9. Kick-Start Campaign
In more White House news, President Biden’s administration is expected to award billions of dollars in subsidies in coming weeks to top semiconductor companies (including Intel, Taiwan Semiconductor Manufacturing Co., and Samsung Electronics) to help build new factories in the U.S. These subsidies will aim to kick-start manufacturing of advanced semiconductors that power smartphones, artificial intelligence and weapons systems. Intel has projects underway in Arizona, Ohio, New Mexico and Oregon that will cost more than $43.5 billion; Taiwan Semiconductor Manufacturing Co. has two plants under construction near Phoenix for a total investment of $40 billion; and Samsung Electronics has a $17.3 billion project in Texas.[ix]

10. Fall From the Top
Disappointing earnings led Tesla’s stock to fall 12% recently – bumping Elon Musk out of the seat as the world’s richest man. His net worth dropped more than $18 billion with the stock, putting his personal fortune at $204.5 billion. According to Forbes, Musk lost his top spot to Bernard Arnault, founder, chair and CEO of LVMH Moët Hennessy-Louis Vuitton, whose fortune is $207.8 billion.[x]

[i] Sigalos, MacKenzie, “Jamie Dimon says he’s done talking about bitcoin: ‘I don’t care’,” CNBC, January 17, 2024. https://www.cnbc.com/2024/01/17/jamie-dimon-says-hes-done-talking-about-bitcoin-i-dont-care.html. Accessed January 17, 2024.

[ii] “A man who claimed to be selling Queen Elizabeth II’s walking stick is sentenced for fraud,” AP News, January 9, 2024, https://apnews.com/article/queen-elizabeth-ii-fraud-walking-stick-daa683a637a21a97adee13f82e1bc9d9. Accessed January 18, 2024.

[iii] “Don’t Look at the CPI. Inflation Is Lower, Says Blackstone CEO,” Barron’s, January 18, 2024. https://www.barrons.com/video/dont-look-at-the-cpi-inflation-is-lower-says-blackstone-ceo/ABEE5987-D259-490B-BAE0-B870625C8AB0.html. Accessed January 24, 2024.

[iv] “Blackstone to take Tricon Residential private for $3.5 billion,” Reuters, January 19, 2024, https://www.reuters.com/markets/deals/blackstone-take-tricon-residential-private-value-35-billion-2024-01-19/. Accessed January 24, 2024.

[v] Cox, Jeff, “Consumer sentiment surges while inflation outlook dips, University of Michigan survey shows,” January 19, 2024, https://www.cnbc.com/2024/01/19/consumer-sentiment-surges-while-inflation-outlook-dips-university-of-michigan-survey-shows.html. Accessed January 25, 2024.

[vi] Soni, Aruni, “These charts show how much traffic has plunged in the Suez and Panama canals — and the potential impact on inflation,” Business Insider India, January 22, 2024, https://www.businessinsider.in/policy/economy/news/these-charts-show-how-much-traffic-has-plunged-in-the-suez-and-panama-canals-and-the-potential-impact-on-inflation/articleshow/107061057.cms. Accessed January 25, 2024.

[vii] Vishnoi, Abhishek, “China Selloff Leads to Record $38 Trillion Gap With US Stocks,” Bloomberg, January 22, 2024, https://www.bloomberg.com/news/articles/2024-01-23/china-selloff-leads-to-record-38-trillion-gap-with-us-stocks?embedded-checkout=true. Accessed January 25, 2024.

[viii] Hernandez De La Cruz, Melissa, “Applebee’s $200 date night pass sold out in one minute,” 9News, January 23, 2024, https://www.9news.com/article/news/nation-world/applebees-date-night-pass-sells-out/507-ec5ad9ea-9d0e-47cc-8c37-71ededdd3248. Accessed January 25, 2024.

[ix] “US to announce billions in subsidies for advanced chips -WSJ,” Reuters, January 27, 2024, https://www.reuters.com/markets/us/us-announce-billions-subsidies-advanced-chips-wsj-2024-01-27/. Accessed January 31, 2024.

[x] Clark, Adam, “Elon Musk Is No Longer the World’s Richest Man After Tesla’s Stock Slump. Who Took the Title.,” January 29, 2024, https://www.barrons.com/articles/tesla-elon-musk-lvmh-bernard-arnault-net-worth-richest-man-5a6ddce3. Accessed January 31, 2024.