The US Economy finished the year strong. In fact, the pace of growth accelerated at the close of 2017. If you recall, Consumer spending represents roughly 70% of the economy. Consumers opened their wallets this year. So far, with a 5% increase in sales from last year, it is tracking to be the best holiday season for retail since 2011. No surprise, e-commerce led the charge with an 18% gain. Christmas falling on a Monday helped too. It gave retailers a full weekend for last minute shoppers. Retailers have enjoyed the holidays.
It started strong and ended strong. Black Friday brought shoppers to the mall but even more stayed on their couch and bought online. The busy Thanksgiving shopping weekend ended with a record Cyber Monday. This year’s Cyber Monday was the single biggest shopping day in Amazon’s history, and the biggest day ever for small businesses and entrepreneurs selling on Amazon. Its customers ordered nearly 140 Million items from small businesses alone that day, and it was just the beginning of the holiday season. It’s like Super Bowl weekend for shoppers. One of us prefers Super Bowl Sunday to Black Friday. Guess who’s who.
An unprecedented surge in online orders caused some delays in deliveries as UPS scrambled to keep up with holiday shopping demand. In order to meet the crush of holiday shipments before Christmas, UPS used hundreds of its office staff to deliver packages, often with little notice. Some UPS employees actually used their personal vehicles. You might have had an Accountant deliver a package to your home last week. Chances are, your recycling bins have been jammed. It’s a Bull Market for Amazon, e-commerce as well as cardboard boxes…
It’s certainly been a Bull Market on Wall Street. There were 62 new record highs for the S&P 500 this year. The holiday season is historically strong for stocks. It’s called the Santa Claus rally. Since 1928, the S&P 500 has averaged a 1.7% gain and traded higher 78% of the time (69 out of 89 years) through this 7-trading day period, vs. a 0.2% average gain and a 56% success rate during any other 7-day period. This year’s Santa clock started December 22nd and ends January 3rd. So far, it’s been a pretty flat Santa. Next Tuesday and Wednesday will determine the results. The S&P 500 has averaged a 1.2% loss in the subsequent 3 months following a negative Santa run vs. an average 2.9% gain following a positive one. This stretch gave birth to the phrase: “If Santa should fail to call, Bears may come to Broad & Wall.” That is typical, although 2017 has been anything but.
We are finalizing our 2018 Outlook, which will be sent out next week. We anticipate another eventful year.
Happy New Year!
We’ll be back, dark and early on Tuesday.
Mike & Meredith