VIDEO: PWC’s Holiday Shopping Survey Backs Our Consumer Plays
When McDonald’s calls out a bifurcated consumer, you know consumers are being careful.
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In Wednesday's Portfolio video, Chris Versace recaps the moves we made earlier in the day with several holdings, including a few price target increases, some register ringing and scooping up more shares of Marvell MRVL and Palantir PLTR.
He also offers a reminder of what’s ahead for Thursday's economic data and then shift to the findings of PWC’s latest survey and what it says about the consumer and the 2025 holiday shopping season. We won’t spoil it for you here, but when you’re done, we think you’ll agree with how we’ve positioned the Portfolio.
Transcript
CHRIS VERSACE: Hey, folks. Chris Versace here. Wednesday, September 3rd. And before we get started, I just wanted to make sure that you saw some of the things that we did earlier today. I'm referring to how in one alert, we increased our price targets for both Apple and Alphabet to 250. That, of course, follows the favorable outcome of a DOJ ruling. And in a second alert, we not only rang the register prudently on the shares of Alphabet because this morning's news really popped the stock even as we raised our price target. And of course, the shares moved well past that 4.5% position size. So some prudent action was taken, but again, very profitable for the portfolio.
What did we do with some of those proceeds? Well, we had the shares of Marvell and Palantir on our shopping list. Marvell following just simply overdone pullback, in our view following last week's in line quarterly earnings report and in line guidance, so we took advantage of that. We also did the same with Palantir, which had fallen double digits and was really hugging that 50-day moving average.
I will say that even after we made those moves, we still have some additional room to pick up more shares of Marvell and Palantir, subject to what we see later this week and potentially early next week when we get the next round of economic data and the market assesses its implications, good, bad, or indifferent for the widely expected September rate cut, as well as two more rate cuts in the balance of the year.
Now, we've got a lot more details about the decisions behind those actions and each of those two alerts, and I would suggest if you haven't read them, please take your time and do so. Now, while we wait for the next batch of potentially market moving economic data, we've got no surprise some battling Fed heads that are out there. Waller saying time to cut rates. We also, like others, do, think that Waller might be motivated as he seeks the Fed Chair job when Powell is done with his current term.
And on the other hand, we have Bostic, who says inflation is a bigger risk than any softening that might be happening in the jobs market, and that he still sees one rate cut this year. And I will say that Bostic has been a sobering voice, really over the last year or so, if you remember going, way back, he was the one who was calling for more aggressive rate cuts. But really over the last few quarters, he's followed the data like we do. And he has dialed back those expectations.
Even early this year, he was talking about the potential for maybe two rate cuts in 2025. But as the inflation data has perked back up, and if you look at some of the GDP figures, Bostic has come around to saying just that. He sees inflation as a bigger risk and really just one rate cut. Now, those opposing views, let's say, sets the tone for what we'll get this afternoon with the Fed Beige Book. This is, of course, the anecdotal collection of various Fed member banks. Just given the timing, it's going to be pretty important in my view. But those comments from Waller and Bostic and what we see in the Fed Beige Book will also help set up the big data that we'll get tomorrow.
We've talked about it. I'm not going to belabor it. Tomorrow morning we will get the August ADP employment report. We'll also get the August ISM service's PMI data. As you know, we will follow what the data says, both on a reported basis and a trailing three-month basis to smooth things out to make sure the trend is easily identifiable. We'll be sharing those thoughts with you. And if it means that we have to make any adjustments to our thinking about the market, the economy, the portfolio, how it's positioned, we will, of course, be communicating that to you. But I will say that based on again, what we saw on the August PMI report, not really expecting any dramatic surprises, but we'll see and we'll react accordingly.
Now, I want to pivot a little bit and start talking about the consumer. And I know it's only just past Labor Day, but we are starting to see the trickle of holiday shopping forecasts begin. The first one that we got is from PricewaterhouseCoopers or PWC, and it found that shoppers plan to spend an average of $1,552 per person this holiday shopping season. That is a 5.3% decrease on a year over year basis.
And the report also had a wider view on the consumer, where it says that 84% of consumers said that they plan to reduce their spending over the next six months, especially on dining out. That was what 52% of the respondents said clothing 36% and big ticket items 32%. What were the reasons cited for these declines? Well, you can probably guess what they are. Rising prices, new tariffs and the increasing cost of living, those were all the key concerns.
Now, what was particularly interesting was what demographic group is having the greatest impact on this decline in spending? GenZ. Per PWC, it found that the group, known as GenZ, will cut its holiday spending budget by around 23%. What's interesting about that, is that last year, GenZ led the spending for the holiday shopping season. That's an interesting turn. I will say a few things about it.
One, just given the insights from PwC's report, on its face, we're pretty comfortable with how we've positioned the portfolio with Costco, Amazon, and TJX. But remember that PWC is just one of several holiday shopping season forecasts, and we'll probably get some as well for Halloween, Thanksgiving as well. We'll be amalgamating all of those and what their implications are. But I will say this that if you haven't seen it this morning, I will share that. When you see a company like McDonald's come out and say that there's a two tier economy and lower income consumers are spending less, it does support how we've positioned the portfolio with those three stocks Costco, Amazon, and TJX, but American Express as well.
Now, before we end today's video, just a quick reminder that in addition to all that economic data we're going to get this afternoon and tomorrow, we will also be getting after tomorrow's market close September 4th, the next monthly revenue report for the month of August, obviously from Costco. And I will share this that we do see Costco continuing to gain consumer wallet share, both from our visits and other anecdotal data points that we've been getting and the shares have pulled back. In fact, they're not too far from where we last added some in late July. So I would say that for folks that are underweight Costco shares, this would be a good place to pick some up.
Folks, that is a wrap for today's video. We've got two days left in the week, but as I mentioned yesterday and today, with all the data that we'll be getting and their implications, they are going to be important. So please be sure to check your emails, your alerts if we make any moves with the portfolio could be price target changes, could be something more. We want to make sure that you are right there with us. Thanks for watching.
At the time of publication, TheStreet Pro Portfolio was long MRVL and PLTR.
