Another Black Friday and Cyber Monday are behind us...
Shoppers Are Using Record Levels of This Kind of Debt
By Vic Lederman, publisher, Chaikin Analytics
Another Black Friday and Cyber Monday are behind us...
And of course, consumers are still spending plenty of money.
Software giant Adobe (ADBE) publishes data on spending habits throughout the holiday season. It tracked more than $137 billion in spending during the month of November alone.
That marks a 7% increase from this time last year.
But another trend is developing behind the scenes here...
Consumers have continued to lean on "buy now, pay later" ("BNPL") loans this season.
According to Adobe's data, about 7% of November sales came from BNPL financing.
And from the beginning of November through the end of December, Adobe expects consumers to spend more than $20 billion via BNPL loans.
This would represent an 11% increase from the same period last year.
On the surface, this doesn't look good for overall economic health...
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On Monday morning, Joel Litman and Rob Spivey are going live with an emergency briefing. In short, a massive convergence of catalysts – political, economic, and calendar – just aligned to hand you the chance to see the biggest, fastest gain you've likely seen all year. In other words, once you see what's about to happen, you have a small window of opportunity to potentially DOUBLE your money in a single day – simply by getting in front of this urgent story.
A Consumer-Debt Crisis Isn't Here
The Federal Reserve Bank of St. Louis compiles quarterly data on household debt. In this specific dataset, it tracks household debt-service payments as a percentage of disposable personal income going back to 1980. Take a look at the chart below...
As you can see, Americans spend about 11% of their disposable personal income on debt payments.
This may seem high. But it's below the all-time average of nearly 12%. And it's nowhere close to the record highs of nearly 16% during the financial crisis.
Put simply, it's not time to sound the alarm on the consumer-debt level just yet.
Meanwhile, these loans could even help retailers as well.
BNPL loans offer a way for folks to buy products that they might not have purchased otherwise. And this could give companies a cushion against the K-shaped economy.
To be clear, it's no secret that these BNPL loans come at a steep price...
Earlier this year, my colleague Ethan Goldman discussed the massive interest rates. Loans from BNPL service provider Klarna (KLAR) can come with as high as 35.99% APR.
Now, Klarna also offers an interest-free "pay in four" option. But Adobe's report doesn't say just how many people used either option.
And as I said yesterday, plenty of folks are getting more selective with their spending.
But of course, they haven't outright stopped spending money. And for now, the American consumer as a whole is still going strong.
Looking ahead, we'll have to keep an eye on the BNPL trend. And we'll have to wait and see how the holiday spending ultimately shakes out.
Good investing,
Vic Lederman
P.S. As I mentioned yesterday, we've started something else "behind the scenes" at Chaikin Analytics...
I've joined social media. And you can find me on Instagram and X (formerly Twitter).
I plan to share regular thoughts and observations on the markets. By doing that, I hope to guide everyday folks like you into making smarter decisions with your money.
It's all free to follow along. So if you're looking for even more financial insights, you can check out Instagram here and X here. I'll see you over there.
Market View
Major Indexes and Notable Sectors
# Hld: Bullish Neutral Bearish
Dow 30
+0.87%
9
14
7
S&P 500
+0.35%
119
232
148
Nasdaq
+0.24%
26
46
28
Small Caps
+1.82%
631
939
336
Bonds
+0.28%
Energy
+1.87%
10
8
4
— According to the Chaikin Power Bar, Small Cap stocks are more Bullish than Large Cap stocks. Major indexes are mixed.
* * * *
Sector Tracker
Sector movement over the last 5 days
Energy
+2.86%
Information Technology
+2.19%
Consumer Discretionary
+1.7%
Financial
+1.13%
Industrials
+0.92%
Communication
+0.59%
Materials
+0.11%
Consumer Staples
-0.1%
Real Estate
-0.96%
Health Care
-2.11%
Utilities
-2.66%
* * * *
Industry Focus
Health Care Services
22
26
12
Over the past 6 months, the Health Care Services subsector (XHS) has underperformed the S&P 500 by -4.26%. However, its Power Bar ratio, which measures future potential, is Strong, with more Bullish than Bearish stocks. It is currently ranked #10 of 21 subsectors and has moved down 1 slot over the past week.
Top Stocks
CAH
Cardinal Health, Inc
CYH
Community Health Sys
EHAB
Enhabit, Inc.
* * * *
Top Movers
Gainers
MCHP
+12.17%
ON
+11.01%
VRTX
+6.92%
ODFL
+6.7%
HUM
+6.18%
Losers
ARE
-10.05%
PSKY
-7.27%
NFLX
-4.93%
COR
-4.38%
DOC
-4.16%
* * * *
Earnings Report
Earnings Surprises
CRM Salesforce, Inc.
Q3
$3.25
Beat by $0.39
SNOW Snowflake Inc.
Q3
$0.35
Beat by $0.04
DLTR Dollar Tree, Inc.
Q0
$1.21
Beat by $0.13
GWRE Guidewire Software, Inc.
Q1
$0.66
Beat by $0.05
THO THOR Industries, Inc.
Q1
$0.41
Beat by $0.48
* * * *
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