Market Note – November 27, 2023

By Hightower Great Lakes on November 27, 2023

Black Friday “Events”

Black Friday and Cyber Monday are now largely blended into seasonal holiday sales and week-long “events,” as dubbed by many retail businesses.

Most retailers opted to maintain ongoing holiday sales, while throwing higher discount percentages on over-produced goods and casual stocking stuffers. Higher-end and higher-demand products still attracted a higher sticker price, removed from any significant Black Friday discount.

Consumers showed up and stores appeared well-employed to handle the traffic. The expansion of discounts to last throughout the week removed any “mad-dash” experience for customers. E-commerce sales also participated in the same holiday discounts. Though notably, shipping costs remained standard, and retailers did not broadly advertise additional savings on shipping as part of their Black Friday e-commerce deals.

Despite expectations for slowing retail sales growth, data shows that the $9.8 billion in U.S. online Black Friday sales represented a +7.5% y/y increase. Cyber Monday is expected to bring in an additional $12 billion in U.S. online sales. [1]

India’s Industrial Revolution

Prime Minister Narendra Modi is pushing an aggressive objective to transform India into a developed nation by 2047. He is doing this by investing heavily in infrastructure, including a $1.2 trillion program to solve supply chain bottlenecks, along with roads and highway infrastructure bills.

This capex is boosting economic growth for the nation. India is the world’s fifth-largest economy and is expected to become the world’s third-largest economy by 2027.

The Indian consumer, a significant part of the economy, is pressured by inflation – leading to material outperformance of India’s infrastructure stocks versus consumer goods peers in the past year. Additional stakeholders include U.S. companies like Apple (AAPL) and Tesla (TSLA), which are building new plants in India to improve supply chains.

Table 1: U.S. S&P 500 Companies With Highest Revenue Exposure to India[2]

The United States is similarly investing heavily towards infrastructure capex; this is driving strong demand across industrials, particularly aerospace, warehouse and automation themes.

The rise in fiscal capex towards onshoring and supply chain infrastructure is a function of the pandemic bringing to light company weaknesses across global trade, elevated geopolitical competition and technological innovation.

We think there are opportunities to generate outperformance by investing in select industrials with strategic exposure to these major themes and long tailwinds.

Chart 1: U.S. Industrial Companies Outperforming Broader Equity Market Since Congress Passed Bipartisan Infrastructure Bill[3]

Sleepy Week for Bonds

U.S. bonds traded relatively flat last week. The U.S. 2-year rallied by 5 bps to finish the week after jobless claims and Michigan sentiment data showed inflation expectations above estimate. The 10- and 30-year ended just 2 bps higher to finish the week. High yield spreads tightened by 12 bps to +418. Munis outperformed on the week, with yields lower by 7-13 bps across the curve.

The Week Ahead

Earnings – Wednesday: DLTR; Thursday: KR, ULTA, CRM.

Economics – Monday: New Home Sales (October), Dallas Fed Index (November); Tuesday: Consumer Confidence (November); Wednesday: Second Preliminary Third Quarter GDP; Thursday: Core PCE (October), Personal Income (October), Chicago PMI (November); Friday: ISM Manufacturing (November).

Return for Selected Indices^[4]

Click here to read last week’s Market Note (11/20).

Disclosures

Investment Solutions is a group comprised of investment professionals registered with Hightower Advisors, LLC, an SEC registered investment adviser. Some investment professionals may also be registered with Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC. Securities are offered through Hightower Securities, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is neither indicative nor a guarantee of future results. The investment opportunities referenced herein may not be suitable for all investors.

All data or other information referenced herein is from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other data or information contained in this presentation is provided as general market commentary and does not constitute investment advice. Investment Solutions and Hightower Advisors, LLC or any of its affiliates make no representations or warranties express or implied as to the accuracy or completeness of the information or for statements or errors or omissions, or results obtained from the use of this information. Investment Solutions and Hightower Advisors, LLC assume no liability for any action made or taken in reliance on or relating in any way to this information. The information is provided as of the date referenced in the document. Such data and other information are subject to change without notice.

This document was created for informational purposes only; the opinions expressed herein are solely those of the author(s) and do not represent those of Hightower Advisors, LLC, or any of its affiliates.

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[1] Source: Barron’s. As of November 26, 2023.

[2] Source: FactSet. As of November 26, 2023.

[3] Source: FactSet. As of November 26, 2023.

[4] Source: Bloomberg. As of November 26, 2023.