Capitalist Investor

End of Year Market Analysis, Macy's Thanksgiving Parade, and more..., Ep. 301

• Strategic Wealth Partners

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In the latest episode of the "Capitalist Investor" podcast, Tony, joined by guest host Dave, dives into a myriad of engaging topics, ranging from Thanksgiving traditions to market predictions and the intriguing impacts of tariffs. We've distilled the key points into five hot topics that captured our attention.

1. Thanksgiving Traditions: The Deep-Fried Turkey Debate

The episode kicks off with a light-hearted discussion about Thanksgiving culinary traditions, specifically the art of deep-frying turkeys. Tony and Dave debate the merits of brining versus injecting the turkey, with Dave advocating for a thorough brine. Dave also offers some practical tips for safely deep-frying a turkey, such as cutting the burner flame before placing the bird in the oil to avoid any mishaps. As Thanksgiving approaches, this segment is both timely and practical for listeners planning their holiday feasts.

2. Inflationary Pressures Evident in Macy's Thanksgiving Parade

Another holiday staple, the Macy's Thanksgiving Parade, comes into focus as Tony and Dave dissect the financial aspects behind the glittering spectacle. Macy's has significantly increased its asking price for NBC to broadcast the parade, from $20 million to a staggering $60 million. This move highlights broader inflationary trends, as NBC's need to increase commercial costs to maintain margins showcases the ripple effect of rising expenses. The hosts draw comparisons with Super Bowl ad costs, providing deeper insight into how such decisions reflect inflation within media and advertising sectors.

3. Market Meltdown or Skyrocket? Year-End Predictions

Tony and Dave shift gears to discuss the state of the financial markets. Despite a tumultuous year, they note the market's upward trend and speculate on future performance. Of particular interest is an analyst's bold prediction that the S&P 500 could reach 7,000 by year-end—an ambitious target that would require the market to surge by approximately 12% in just one month. The hosts discuss consumer spending trends, noting a predicted 3-8% increase in holiday spending, which could be a key driver for the bullish outlook. However, the mixed results from major retailers like Walmart and Target suggest a nuanced consumer landscape.

4. Trump's Tariff Threats: A Double-Edged Sword

Tariffs appear as both a potential headwind and tailwind for the economy. With former President Trump suggesting a broad implementation of tariffs on imports, businesses are scrambling to stockpile goods before tariffs drive up prices. Dave posits that these tariffs could be more of a strategic chess move rather than a definite happening, given the nuanced implications for inflation and domestic job creation. This preemptive purchasing is currently acting as a tailwind, but the long-term effects remain uncertain.

5. The Hunt for the Next Revolutionary Product

Lastly, the podcast touches on the potential of artificial intelligence to drive future consumer trends. Dave highlights an article suggesting that while AI integration is on the horizon, a must-have consumer product similar to the iPhone or iPad has yet to surface. This sets the stage for a significant market opportunity when technology finally converges into a groundbreaking consumer product, possibly in 2025 or later. The hosts muse over what this revolutionary item might be and how it could echo the impactful innovations of Steve Jobs' era at Apple.

As the year comes to a close, the "Capitalist Investor" podcast provides a dynamic blend of holiday cheer, market analysis, and forward-looking insights. 

All right, and welcome to this week's episode of the Capitalist Investor. You have me, the lone wolf. Everyone abandoned me this week. Derek and Luke are both on assignment. But my right hand man, my guy can always count on Dave Abate, Engineering brothers out here doing the podcast this week. So what's up, Dave? How you doing, man? I'm doing great. Can't wait to get this one kicked off. Yeah, I mean, it's, it's Thanksgiving week and you, you were bugging me the other day, like, you know, we've been talking about deep fried turkeys for quite some years and my brother always made them, but. And they're delicious. I just haven't had one in quite some time. I, I really think once you make that change, you never go back. No, it's that good. It is. It is very good. You inject it and all that stuff. Like you got the injection down. I don't do a brine. I don't do an injection. I don't believe in the injections. I'm more of a brine person. What I will say, if you're going to do it, make sure you watch a little YouTube video tutorial. You can do some damage if you don't know what you're doing. Right, right. You want to, don't do it in your garage. You don't want to have like water in the cavity and stuff like that. Right. Water and oil are not a good mix. Correct. And then also a quick pro tip is cut the burner flame off before you drop the turkey in. That way you won't have the. If it does, if it does overflow, like, it's not going to. Okay, I like that. I like that. Because, I mean, what are you going to do? Give it a good minute to see. Make sure it's got. You have enough oil in there to cover the bird but not go over the top. Exactly. Okay, got it. All right, well, enough about Thanksgiving turkeys and things like that. We'll keep the episode a little on the short side this week. And so one thing that I caught, you know, one reason is like, I just feel like there's not a. There's not a lot going on right now financially. You know, the market's just continuing to melt up right now. So one of the things that did catch my eye, that was more of an interesting read related to Thanksgiving was the Macy's Thanksgiving parade. Dave. So the article kind of says that Macy had. Macy's has been accustomed to making $20 million a year by NBC Broadcasting. The, you know the parade on TV and now they're asking for 60 million, an immediate jump. So maybe they're catching up on lost times, things like that. Because NBC historically has made over $50 million in ad revenue. So they're like, you know, Macy's probably like, well, you know, like, if you're making all this money, where's, where's my cut? So I can see the jump. But now why would NBC do that? Because they only make 50 and they have to spend 60. That, that's definitely not a good ROI. So like that sounds inflationary on the ads. That's crazy how much it jumped right when we saw these numbers. Yes, like getting closer to the super bowl stuff, but not quite there. Yeah, we just had that conversation before we went on air. And it's like, so right now the, the ad spends like 900 grand per commercial or 850 to 900,000 during the parade right now, as compared to the Super bowl. Last year was $7 million for 30 seconds. Yeah. And then we went back in time and back in 2000, it was 2 million, roughly $2 million for an ad spend in the Super Bowl. So we have good data that pays off when they, when they run those ads. Like, is there good data? Does it, doesn't it feel like half the ads for the super bowl are just like pop up companies that had a bunch of PE money and they're trying to like just make a cannonball kind of splash and then you never hear from them again? There's got to be a good chunk that do that, right? I mean, the, the go daddies of the world that probably were paid off and they're still around, like probably made sense. But for every one of those, like how many of those flash in the pants disappear? Yeah, I mean it was always, I was, I think everyone was always excited to see like the Bud Light commercials. Dorito has come up with some great commercials over the years. Those what come to my mind. But it used to be a awesome thing like, hey, you got the game and the commercials. Now they broadcast the commercials ahead of time now. But I digress. But, but the bigger headline here is just inflation, right? I mean, this is just more of a signpost for inflation. How this thing has tripled in one year. It's just, it's hitting all corners. Yeah. I mean, for them to, for, for, for NBC to accept that deal, like they'd have to immediately almost like raise their commercial costs by 50%, you know, to have their kind of margins that they had before if, you know, if they were spending 20 and making 50. Sounds like a really good ROI. But then you have, you know, if they have to raise their rates to catch up, like, because they're already behind. I don't know, it's just very odd to me to. I mean, whatever. I mean, it's. That's not my lane. But good luck with those, with that marketing. Yeah, it sounds expensive for. To run an ad during we were talking about like, do you really watch the parade? We've never watched it end to end. I think it's more. We talked about it just kind of have it in the background. Right. You know, as your, you know, your day is going on and popping in and you might see, you know, Snoopy and the Peanuts crew there for a while. So. Right. They catch the kids attention. But I don't know if anyone's sitting down, eyeballing it for three hours. Three hours, Right. And I'm with you there because you kind of put it on while you're making Thanksgiving food and stuff like that, getting ready, whatever. But. Well, I just thought it was interesting. It's like night, you know, like the immediate jump on that. That's exactly, you know, in our world. It's like, wow, that sounds extremely inflationary. Yeah. So. All right. The other thing we wanted to do today was just, you know, because again, light news, light week for, you know, just the holidays is I was reading one of our research firms, you know, kind of take on a few things and it made me kind of just piece together what the rest of the year is going to look like on a, you know, for the markets and what we should expect. And you know, I'm already seeing some analysts saying that the S and P could be like 7,000 by the end of the year. That's one month. I mean, I thought I saw and I'm like, I had to like, look at it again. And they said by the end of the year. And I'm like, are you insane? Like that's another. That's 12% or something like that. Six to seven is, you know, about 12, 13%. So it is one of the strongest times to be in the market seasonally. Right. There's a lot of tailwinds going on that. That's a hard number to wrap our mind around. Right. Well, it was, it's pretty interesting. So like consumer. This is all wrapped around consumer discretionary at this point. Right. Because we have, you know, third quarter earnings were. Were very strong again. And it's going to be difficult to say that fourth quarter. So when they report In January it should be very similar. Right. Because there's two themes right now. The, the, the, the, you know, the average spender, like the Americans were spending money still. We're racking up debt doing it, but we are still spending because we all have jobs. So. And then we have the holiday season. There's been a little mixed bag. So like I noticed that like Walmart and Nordstrom's, they all had good reports on consumer spending, but Target and Kohl's did it. Right. So it's kind of like a little murky on, on the, on the consumer. But the holiday season, man, they're saying that, you know, they're expecting a, like a 3 to 8% increase on spending over last year. Yeah. And it seems like the continuation of the big story of a tale of two consumers really. Two economies going out there. The haves and the haves. Not. Have not. Yes. The people that have the means, they're going in there, they're putting it to work. And then unfortunately, those inflationary pressures we talked about earlier, those are hitting that lower end consumer a lot harder. But from a dollar perspective, the haves are making up for it with the excess purchases. That's a good point, Dave. You're exactly right. The high end consumer is doing okay and they're keeping up with last year's spending and spending a little bit more. But the bottom end, you know, when you start wrapping in just things that you need for general, you know, living food and energy, like they're getting crushed. And that's unfortunate. So hopefully that, you know, corrects itself over the next, you know, few quarters, a few years, I guess. But everything's pointing towards a strong, you know, earnings season come January. And then to tie into that with Trump's coming out and saying how he's going to be bolting on tariffs for every import essentially across the board, some people get preferential treatment, AKA higher tariffs, like China and stuff like that. That is also a, believe it or not, it's a tailwind right now because what you have are a lot of that, you know, United States vendors like already going out and asking their, you know, you know, they're not, you know, they're international people for can I double down my order? So like, it's like, let me get it now as a discount. I will, you know, I will go out and get a loan so I can get this right. So there's that, there's just like they call like a pull forward, you know, activity ahead of the tariffs. Now you tell me Dave, what do you think like, are the tariffs more of a, is it happening or is it more of a threat? You know, depending on who you listen to. I think it's more of a chess move just to have in your back pocket. Right. Knowing that you could play that card if need be. I don't think this administration wants to be in the business of stifling growth across the board. So they're gonna, they're gonna play a card when it makes sense. Yeah, when and how it makes sense. Right. It. So I kind of like tariffs are gonna, are inflationary because, you know, they're gonna raise prices on everything that we use to build things here in the United States or sell. But the other side of that sword that I see is, all right, if you know, that is brought in as a, you know, import is more expensive, would that make you buy American and does that provide better jobs in America? Right. There's got to be offsets to make it make sense, right? Absolutely. You know, I know our labor, our labor field is, is more expensive, you know, more capital intensive than, you know, around the world and things like that, but that's the side I see, like, hey, we're going to keep jobs moving in America, but we're going to pay more for it. So like it's this double edged sword, but we're doing that right now where everything's more expensive and wage growth isn't really, it's kind of keeping up now. But it got crushed the last few years when we had those really big spikes in inflation. Absolutely. Yeah. So that's one, that's another. So it's a tailwind right now as people try and go out and buy more items before the price goes up via tariffs. And then you also have the other headwind of like geopolitical, you know, like you hear the headlines of, you know, Russia and Ukraine are like, it sounds like it's getting more feisty over there. Again, I'm not a, you know, following the war, you know, every day you kind of hear what's going on on the macro level. But the macro level sounds like things are escalating slightly to a lot based on who's giving the narrative. Right. I don't know like that, that, that could also be a big issue if it were to escalate a lot further to where they're using nuclear weapons, things like that. Like I can see that throwing up huge wrench into, you know, the world and our market. So definitely still a lot of cross currents going on out there. On the positive side, the one that I'll kind of mention an interesting article came across my desk the other day and it related to going back to that consumer. Right. And that sentiment, like their spending is up. You mentioned close to 8% year to year. There really isn't. When we go back to that macro theme with artificial intelligence and the potential. The point of the article was like saying there really isn't a flagship product out there that's getting people's consumers interest to purchase right now in this holiday season. Like, they haven't. Retailers haven't figured out a way to capitalize on this yet. Right. So if it's a baseball game, they're saying we're still in this. The game hasn't even started. You're in the. Before the first inning. Right. So batting practice. Batting practice. Like, and you see, you see, like, so. So it's like a phone, right. They've got the button now for like the AI built on. Right. To the phone. So it's going to happen. Yeah. It's the question. They're saying it probably more of a 2025 event, but does it. Is this. Is this lightning in a bottle when this comes out and everyone has this must have product that hasn't hit the shelves yet. The must have product would be. Hasn't been invented yet. Oh, God. So think of like the Ray Ban smart glasses. Yeah. Yeah. So it's like right now it's kind of clunky. You got to be connected to your phone. But when they, when that's perfected and you can really be James Bond walking. Yeah. You could be like Iron man where he actually has the glasses and stuff. Yeah. I mean, you know, it's. I don't know if it's 25. It could be in the next decade where something like that is actually like real. Like, like maybe sooner than not. But I understand what you're saying. So like the next iPhone. The iPhone. Yeah. The next revolutionary type of item where they put a computer in your pocket. Right. Essentially a better computer. Yeah. Right. Well, I'm saying, you know, like, I mean, you went from having, you know, a CPU unit to a laptop to now you're. You have. You can basically do a lot everything on your phone, essentially. So what is the next thing. You know, and that's where. That's why Apple was always. It's amazing what Steve Jobs did when he was in charge of Apple. Like he came up with the Macintosh computer and then it was like the next big thing was like the ipod and then it be. And then it became the phone and Then the iPad. Like, like all of those things were like life change. Like, it was life changing to the, like airplanes, like an airplane, a microwave. Like, those are substantial, like, inventions, and. We haven't hit that yet with the next. What's the next thing? Right. So it's like, it's hard to quantify the impact before it happens. Yeah. Like, and you're saying, like, what AI is really gonna. It's gonna unlock, like, that's the technology behind it all. But how are they going to integrate it into some of the products that we're using right now? I think the biggest problem is that AI chips and things like that just suck a lot of energy. Like, they're, they're very energy, you know, dependent. And so that, that's the, that's the key of unlocking everything is, you know, Nvidia continues to, you know, work on their chips, the components. Right. I mean, there's a shortage in a limited supply. Supply of these chips. Chips, too. Yeah. You know, so how quickly can they get these stuff all ironed out? Yeah. Have enough processing power to make all this work. We'll have to sit down and think about the next revolutionary product, Dave, and, you know, help the world out. All right, well, that's, you know, that kind of. But, you know, long story short, you know, there, there's a lot more tailwinds than headwinds going into the end of the year and even in the first quarter of next year, based on things that are happening right now with, you know, the Republicans not even really sitting in its seats right now, they're. Everything is being prepared for that. Right. And we're seeing some of the fruits of that on the back end of next year will be very interesting. We'll see what. How the Fed cuts rates. They're already talking about cutting again in December, again, which is inflationary. But I also do believe that they overshot, you know, going all the way up to over 5%. But they need to be careful, too, because that's an inflationary item. Yeah. Tony, you're bringing up some great points. And one thing I'd like to reiterate is, like, if we learned anything from Trump's first term, Right. He's paying attention to the stock market. Right. It's kind of his, like, scorecard. So in terms of being, like, accommodated to asset prices and equities in particular, like, it feels like we have an ally in the White House as an investor. Right. And you know what? He's probably kind of licking his chops a little bit because right. Now, the system, quote, unquote, the market and just, you know, money in general is very high because of all the government stimulus over the last several years. Their liquidity is not going to be the problem. Right. So again, it's kind of like those kind of black swan type of things, like immediate rise in inflation, geopolitical issues. Do tariffs really catch traction? So we'll talk about all that. All right, well, kind of give you some insight on next year. We're still very bullish going into the end of the year and probably the first quarter, and with that we'll wrap it up. But we got one big football game. So it's the best rivalry game and maybe just sports in general. Ohio State versus Michigan. I mean, I'm from Ohio State and I know I'm biased, but is it really. It has to be, right? It's in the. Georgia versus Alabama. That's one. No, I think. No, I think it's number one. Is it? I don't know because I look through one lens and I'm like, it just always happened in my life. We're in an echo chamber in Ohio, like, for sure. But I think if you were to pull across the country, it would. I've seen polls. Yeah. And it's up there. Yeah. And what do we call Exogen? Like, you're not. Let's use the M. You're supposed to cross off the M's down in Columbus. That's what they do hardcore. They cross off the M's. So it's Exogen. Yep. But we're outside. We're due. Hey, you know, Michigan's kind of after winning their national championship last year, like, you know, they lost their coach and half their team. So, yeah, they're, you know, building back. And I think one of their quarterbacks retired in the middle of the season. And you have, you know, Ohio State clicking on a lot of cylinders right now. They're, they're, they're beefed up. Right. They're high octane, decent defense, so. But it's a rally. You know, I've seen, I've seen Ohio State come in, you know, and lose to an unranked Michigan team before, so. So we'll see. Yep. They've got to. Gotta get it done on the field, but high hopes for this one. Yeah, I get, I'm lucky enough. I get. I was invited by one of my friends to go and go see the game down there on Saturday, but it's supposed to be really cold, so. We'll see. Yeah, we're your long johns. I? Yep. Thermos, long johns, you know, all that stuff. Even earmuffs. Who knows? All right, everybody, have a great holiday weekend and we'll see you next week. The opinions expressed in the podcast are for general informational purposes only and are not intended to provide specific advice or recommendations for any investment, legal, financial or tax strategy. It is only intended to provide education about the financial industry. Please consult a qualified professional about your individual needs.