🆙💸 Stubborn Inflation Rises Yet Again!

Happy Wednesday all,

It is the day before Thanksgiving here in the US! If you celebrate, I hope you have the best Turkey Day. My personal favorite part of Thanksgiving is…definitely the pie. I love Apple Pie, Pecan Pie, and Pumpkin Pie. What’s your favorite pie?

In today’s YouTube video (linked at the bottom) I tell you a cautionary tale of how I lost $100,000 at one of the companies I used to work for. It’s a pretty common scenario and can likely happen to anyone - so make sure you give that a watch. Perfect for Thanksgiving! ;)

Also, some of you have asked me to give my own portfolio updates etc, so if you’re interested in what I’m buying/selling/invested in, you can check it out here.

Enjoy this week’s Hump Days!

- Humphrey & Rickie

👀 Eye-Catching Headlines

Inside Elon Musk’s Quest to Beat OpenAI at Its Own Game (WSJ)

Welcome to the World of 24-Hour Stock Trading (WSJ)

Uber Faces FTC Consumer Protection Probe Over Subscriptions (BBG)

Buffett’s Life Advice May Be More Valuable Than His Portfolio (BBG)

Inflation-Battered Consumers Are Going to Extreme Lengths to Nab Holiday Deals (BBG)

Amazon’s Black Friday NFL Game Is a Play to Keep You Paying for Prime (BBG)

The Weekly Brief

Inflation Sticks Around as Fed Approaches Cautiously

• The Federal Reserve's preferred measure of inflation, the core PCE index, accelerated in October 2024, rising 2.8% from a year ago and 0.3% from the previous month.

• The increase was partly driven by higher stock prices affecting portfolio management fees and supports the Fed's cautious approach to lowering interest rates.

  • Recent comments from Fed officials have suggested that they feel there’s no rush to cut rates while the labor market remains healthy and the economy continues to grow.

• While inflation is taking time to return to the Fed's 2% target, the economic landscape is further complicated by President-elect Donald Trump's economic agenda, with companies already anticipating changes due to higher tariffs.

• Despite the inflation uptick, there are positive signs for future consumer spending, as inflation-adjusted disposable personal income increased by 0.4% in October, the highest since January.

Dell and HP Fall After Reporting Disappointing PC Sales

• Dell Technologies and HP saw a decline in their share prices on Wednesday following indications that the anticipated recovery in the personal computer market has yet to materialize.

  • Dell's PC business revenue fell 1% to $12.1 billion, while HP's PC unit sales rose 2% to $9.59 billion, both missing analyst estimates.

  • Both companies provided weaker-than-expected revenue outlooks for the upcoming quarter, further dampening investor sentiment.

• The companies' executives noted that the expected PC refresh cycle has been delayed, with factors such as the release of Microsoft's new Windows software not driving corporate sales as quickly as in previous iterations.

• Despite hopes that AI-capable machines would boost demand, buyers have not yet seen clear benefits or business value in these new offerings.

Customers Are Quitting Luxury Brands as Price Hikes Go Too Far

• Luxury brands have seen a significant decline in their customer base, losing approximately 50 million customers over the past two years according to Bain.

  • This marks the first time in recent memory that the luxury sector has seen a shrinking customer base, reversing a decades-long trend of "democratization" that had previously tripled the industry's size.

• The primary driver of this change has been sharp price increases, with many luxury items now priced beyond the reach of middle-class consumers who had previously fueled the sector's growth.

  • As a result of these changes, the luxury market is expected to remain flat in 2024, with the number of units sold by the industry projected to be 20-25% lower than in 2022.

• This decline has created opportunities for alternative markets, including secondhand luxury websites and more affordable challenger brands.

  

• Companies like The RealReal have seen significant growth as consumers seek value in the luxury space, while midprice handbag brands such as Polene and Cuyana are gaining popularity among younger, more price-conscious shoppers.

  • Despite these shifts, some high-end luxury brands like Hermès and Brunello Cucinelli have maintained their appeal by focusing on quality and in-house manufacturing.

Chart of the Week

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