👉 Week in Review: 10/08/23

We hope you’ve had a wonderful weekend.

Before we dive in, we want to share the greatest extent of our APPRECIATION for each of you.

We are a team of two who works non-stop to bring quality content to over a million followers and subscribers around the country and globe.

It can be quite draining, but on Saturday morning we received an incredible affirmation of the work being well worth it.

Portfolio Updates:

Still waiting on some funds to clear my account before I’m able to continue to build upon this $57K balance. With that being said, I have two updates I want to share with you:

• I Rolled my Tesla Covered Call Position

Essentially what this means is that instead of letting my original covered call contract expire on October 20th, I was able to “roll forward” the expiration date until November 24th — allowing me to collect even more passive income premium.

Between the original contract and this second “roll,” I’ve collected $2,470 in cash and have since deposited that cash into my checking account. However, going forward I’m going to begin using this money to assist in my larger investing objectives by deploying it into Bitcoin, Chainlink, and Ethereum.

As you all know I’m very bullish on cryptocurrency — especially as we head into the Bitcoin halving of 2024.

• I’m Opening a Position in Nvidia

After watching the following YouTube video, I’ve firmly decided that Nvidia deserves a place inside of my “Long Technology” section of the portfolio. If you like to nerd out on valuation analysis and projecting stock prices — you’ll love this video.

This position will not replace ASML Holdings — it will instead complement it.

Week in Review — Too Long, Didn’t Read:

Conagra Brands improved their profitability, Constellation Brands needs to sell their wine, Israel declares war, Microsoft might need salsa with all of these chips, Adobe sees plenty of holiday card swiping, the Jobs Report was strong, and Consumer Credit appears to be impacted by high rates and student loan repayments returning.

Key Earnings Announcements:

A good, old-fashioned food & bev breakdown.

• Conagra Brands (CAG)

Key Metrics

Revenue: $2.9 billion, flat YoY

Operating Income: $382.7 million, compared to a -$112.3 million loss last year

Profits: $319.9 million, compared to a -$77.5 million loss last year

Earnings Release Callout

“I am proud of our team for delivering another quarter of strong margin recovery and EPS growth despite facing industry-wide macro dynamics that have affected consumer purchasing behavior and elongated the volume recovery period.”

My Takeaway

• Constellation Brands (STZ)

Key Metrics

Revenue: $3.1 billion, an increase of +6% YoY

Operating Income: $978.7 million, an increase of +20% YoY

Profits: $700.7 million, compared to -$1.1 billion last year

Earnings Release Callout

“Our Beer Business this quarter delivered double digit net sales and operating income growth. Modelo Especial continued to outperform the market as the top share gainer and solidified its position as the #1 Beer in U.S. tracked channels.

Meanwhile, our higher-end wine brands, Meiomi and Kim Crawford outperformed their corresponding segment in tracked channels and we continue to expect solid growth acceleration and margin improvement from our overall Wine and Spirits Business in the second half."

My Takeaway

Investor Events / Global Affairs:

Israel officially declares war with Hamas, Microsoft is set to debut its AI chip, and Adobe gives us holiday spending insights.

• Israel Under Attack, Declares War in Response

Hamas launched a surprise attack from Gaza into Israeli towns — leading to deadly clashes and abductions during a major Jewish holiday weekend (Shemini Atzeret / Simchat Torah). Conservative estimates mark 700+ casualties, with an undetermined amount of hostages abducted and taken back to the Gaza Strip.

Israel responded with airstrikes, and Prime Minister Benjamin Netanyahu declared Israel to be at war with Hamas — its first formal declaration of war since 1973.

The attack was widespread, with Hamas militants infiltrating up to 22 locations outside Gaza, causing casualties on both sides. The conflict threatened to escalate further, raising concerns about the volatile situation in the region.

• Microsoft (MSFT) to Debut AI Chip

Microsoft is reportedly planning to launch its own AI chip — similar to Nvidia's graphics processing units, in an effort to reduce reliance on Nvidia as it pursues its AI goals.

This chip is designed for data center servers to train and run large language models, a key technology in generative AI. Microsoft is expected to unveil this chip at its Ignite conference in November.

• Adobe Forecasts $221B+ of Holiday Spending, Cyber Monday of $12B+

• Adobe has predicted that the US online holiday season will reach $221.8 billion — with a +4.8% YoY growth rate — driven by unprecedented discounts and Buy Now, Pay Later (BNPL) usage.

• Mobile shopping is set to overtake desktop for the first time, accounting for 51.2% of online spending.

• Cyber Week (including Thanksgiving, Black Friday, and Cyber Monday) is expected to generate $37.2 billion in online spending — with Cyber Monday alone reaching a record $12 billion.

• Discounts are expected to peak during Cyber Week — with up to 35% off in categories like toys, electronics, and apparel.

• BNPL is anticipated to drive $17 billion in online spending — with strong growth in categories like groceries, home/furniture, and apparel.

Major Economic Events:

Comprehensive peeks at the Jobs Report and Consumer Credit.

• Jobs Report & Unemployment Rate

The US Jobs Report featured unexpectedly robust job growth in September — with employers adding 336,000 jobs. The unemployment rate remained steady at 3.8%, near historical lows, while labor strikes increased as workers took advantage of the tight labor market.

This strong employment data contributed to a selloff in the bond market — causing long-term borrowing rates to rise to 16-year highs. The yield on the 10-year U.S. Treasury note reached 4.783%. The surge in Treasury yields is expected to raise mortgage, auto loan, and business debt costs, impacting the economy. 

This development also keeps the possibility of another Fed rate increase this year open, but it also complicates the Fed's decision-making process regarding inflation and labor demand.

• Consumer Credit (Quarterly and Monthly Perspective)

U.S. consumers accumulated an additional $43 billion in credit card debt during Q2’23 — more than triple the average amount of new debt households have taken on in that period since after the Great Recession of 2007-08.

Total credit card debt and debt per household rose by about +8% from the previous year.

However — the average household's monthly credit card debt remains slightly lower than pre-pandemic levels. The surge in credit card debt is partially attributed to inflation and rising interest rates, which have allowed credit card companies to charge higher interest rates — making balances ultimately harder to pay off.

On a shorter term basis — The amount of credit U.S. consumers used in August actually recorded the biggest decline since the early stages of the pandemic in 2020 — likely because people began to pay back college loans.

Consumer credit shrank by $15.6 billion in August, according to Federal Reserve data — the biggest decline since May 2020. Economists had expected a $12 billion increase, according to a Wall Street Journal forecast.

All of the decline was in so-called non-revolving credit such as auto and student loans. Outstanding credit in that category sank by $30.3 billion.

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Disclaimer: This is not financial advice or recommendation for any investment. The content is for informational purposes only, you should not construe any such information or other material as legal, tax, investment, financial, or other advice.