August 23, 2023

The Appetizer

“We will not touch the sauce.”

• Mark Clouse, Campbell’s CEO. Campbell Soup Co. announced it is buying Sovos Brands, the maker of Rao’s pasta sauces.

Now, on to the numbers. Drum roll, please …

• 4.25%: The yield on the U.S. 10-year Treasury as of last Friday, a level last seen in 2007.
• 21%: The amount by which Argentina recently raised its benchmark interest rate. It now stands at 118%.
• 25%: The average increase in the cost of major ad-free streaming services over the past year.
• 38.7%: The percentage of Americans’ viewing time via streaming services in July. Linear television viewing fell below 50% for first time.
• 2.4%: The decline in global total net private wealth last year, ending at $454.4 trillion.
• $16,025: The price that a donair sandwich costume went for at an Alberta government surplus auction site.

Dig In
Market Momentum

One of the fun parts of our job is seeing how various disciplines play into investing. Who would’ve guessed that we’d ever see Newton’s first law of motion again outside of a physics class! Many times, especially in the shorter term, markets in motion tend to stay in motion.

Over the past 70 years, when the S&P 500 (S&P) experienced a strong to start to the year, that momentum often carried it through the rest of the year. In fact, of the 26 times since 1950 that the S&P has finished the first half of the year up more than 10%, all but three experienced a positive second half.

The S&P just posted a 17% return in the first half of 2023, which was much better than expected. Market volatility was low and Big Tech stocks led the charge. Score!

Looking ahead to the second half, we expect volatility to pick up in light of this year’s continued economic uncertainty and a possible government shutdown looming. However, we remind investors to keep their composure, because market timing is hard. Additionally, we see several positive factors that could push markets higher from here.

Check out Sight|Lines for a deeper dive.

Weekly Specials

A Belgian university is shaking things up by offering “Swifterature” this fall. The class, aptly named “Literature: Taylor’s Version,” will use Swift’s themes, imagery, and language to engage with classic literature from writers such as Chaucer and Shakespeare. Hopefully the school doesn’t use Ticketmaster software to register for classes …

Remember how last year we talked about pandemic reopenings creating supply and demand imbalances that led to high inflation in many countries? Well, China’s reopening has taken a different route: An oversupply of goods met a lack of domestic demand, causing deflation. While it’s not good news for the Chinese, it may help the rest of the world continue their fights with inflation.

Delinquencies (aka not paying your bills) across different types of debt are rising. Case in point: The amount of fashionably late (more than 60 days) subprime auto loans rose to 5.37%, the highest June level ever. Normally, defaults pick up when unemployment goes up, but with unemployment at 3.5%, what’s the scoop?

A couple weeks ago, Fitch used the threat of a government shutdown this fall as part of its reasoning in lowering the U.S’s credit rating. Stifel’s Brian Gardner highlighted in a recent Potomac Perspective that markets tend to ignore the impact of a government shutdown. In fact, the most recent shutdown in 2018-2019 saw the S&P 500 rally more than 10%.

It’s hard to imagine Lionel Messi’s Major League Soccer debut going any better. As of this writing, Inter Miami entered the Leagues Cup tournament in last place – six games and nine Messi goals later, the team is playing for the tournament championship. It’s been quite the show … enough for fans to spend $1,000 per ticket.

Corporate Lunch

Netflix is expanding their video game catalogue, hoping to better penetrate the market. An estimated average 1.7 million people are playing their games on a daily basis, less than 1% of their subs.

The owner of fast-food staples Taco Bell, Pizza Hut, and KFC wants exclusively digital transactions. Imagine yelling REPRESENTATIVE at a drive-thru.

Spotify revealed that folks are tuning in to three hours of white noise daily, which is raking in as much as $18,000 per month for some podcasters through advertising.

Bambu Lab, a manufacturer of 3D printers, said a disruption to its cloud connection led to its printers going rouge overnight and printing by themselves.

Mark Zuckerberg said “it’s time to move on” from the proposed cage fight with Elon Musk. Someone must have told him Elon has performed a bit of karate, Brazilian jiu-jitsu, Taekwondo, and judo.

Cava stock jumped big time after turning a profit in its first report since becoming a public company in June.

Google is testing an AI assistant that offers life advice. I hope this helps folks in need, but we are training bots to have emotions, just saying.

Some big time retailers reported earnings, giving us a look into the health of U.S. consumers. Home Depot and Target experienced a decline in sales from the same quarter last year, while Walmart marked 5.7% growth. Despite varying performance over the quarter, all three companies are expecting softness in demand over the next quarter.

Diversification does not ensure a profit or protect against loss.

Indices are unmanaged and are not available for direct investment.

The Standard & Poor’s 500 Index is a capitalization-weighted index that is generally considered representative of the U.S. large capitalization market.

Past performance is not indicative of future results.