Gobble Gobble

With less than a week until Thanksgiving, I hope you are beginning to get into the holiday spirit.  The markets shrugged off last week’s decline to attempt a modest comeback this week.  The news was mostly positive, with help from both Walmart and Nvidia.  In the case of Walmart, the company reported that 75% of its growth in the quarter came from customers making six figures or more.  While this is a testament to inflation, it is also a testament to customers continuing to spend.  Note, that next week is a short trading week with markets closed on Thanksgiving and only open for an abbreviated day on Friday.  Given the short week, we won’t be sending out an email but we want you to know we wish you a very Happy Thanksgiving in advance.

In company news, we learned that the Department of Justice (DOJ) wants to break up Google.  More specifically, it intends to separate the company’s browser, Chrome, from the company.  The DOJ asked a judge – who previously ruled Google Search was an illegal monopoly – to force the company to sell Chrome.  Google said it plans to appeal the case, and the judge won’t make a final decision until August 2025.  For the past several years now, Lina Khan, head of the Federal Trade Commission, has made it her mission to go after U.S. tech companies she felt were abusing their power.  Those companies include Nvidia, Meta, Microsoft, Amazon, and Apple among many others. This has had the effect of slowing growth, hampering innovation, and preventing mergers and acquisitions.  I am optimistic that this regime will change soon.    

As for earnings announcements, both Nvidia and Walmart reported this week.  Perhaps not surprisingly, inflation-weary shoppers continue to search for value.  With that in mind, the world’s biggest retailer posted 3rd quarter results that easily beat Wall Street expectations.  The company had revenue of almost $170 billion in the quarter notching gains across all product categories and income cohorts.  It was a totally different story for Target, which reported weaker-than-expected earnings while simultaneously slashing full-year guidance and throwing cold water on its expectations for holiday sales.  Target stock (TGT) fell over 21% on the news.  The company had been trying to attract an aspirational customer for some years now, while slowly moving its merchandise upscale.  It seems this strategy may have been ill-timed as inflation has pushed customers downstream to lower-cost retailers.  As for Nvidia, what is there to say?  The company posted record revenue of $35 billion, up 17% from Q2 and up 94% from a year ago.  While growth in all segments is off the charts, much of the good news is already priced in, hence the modest price movement this week.  How does that saying go?  For whom much is given, much is expected.

In a surprise bit of news, a new survey found that influencers have, to an extent, replaced mainstream media.  According to Pew Research, about 21% of U.S. adults (and nearly 40% of adults under the age of 30) now get their news from individual creators.  Some of the biggest takeaways are that 63% of news influencers are men, that X (aka Twitter) accounts for 85% of these influencers, and that TikTok is the only social media platform where the number of liberal influencers slightly outnumber those of conservative influencers, 28% to 25%.  What this means for mainstream media is anybody’s guess, but I suspect it will have to adapt sooner rather than later.  The age of Walter Cronkite is over.  Meet Joe Rogan.

In closing, you may know that Harvard is exclusive, but do you know just how exclusive it is?  As it turns out, it may take more than just good grades to get accepted into Harvard.  A report by Harvard newspaper, The Harvard Crimson, discovered that nearly 10% of students enrolled at Harvard come from just 21 U.S. high schools (0.078% of public and private schools in the U.S.) since 2009.  Half of those schools are in Massachusetts, New York, or California.  Twelve of those twenty-one schools are private with an average tuition of $64,308 per year; nine are public.  Of those nine, four are selective magnet schools, four are located in highly affluent suburbs, and the other is Cambridge Rindge and Latin, which is a stone’s throw from Harvard itself.  That leaves the remaining 90%, however, I have a hunch about those too.  Now you know. 

Bruce J. Mason, MBA