Holidays Filled with Discounts and Financing: Online holiday spending saw an increase of almost 5%, reaching a record $222 billion this year, as per Adobe's data. Notably, the increase appears to be fueled more by volume than pricing, marking a departure from the impact of inflation seen in recent years. The primary drivers of this increase, namely discounts and the expanded availability of buy now, pay later options, raise questions about the underlying strength of the headline growth. The data reveals significantly higher peak discount rates across a broad range of goods compared to last year. The fact that around 1/5 of total holiday online spending occurred during "Cyber Week" supports this trend. Additionally, there was a nearly 15% uptick in the use of buy now, pay later options, reflecting increased accessibility through platforms like Affirm and Klarna. The unfolding purchasing trends into the new year will be of particular interest, with major retailers set to report earnings later this month.
New Key on the Keyboard: Microsoft has revealed plans to introduce a Copilot key in Windows laptops, marking the most substantial change to physical keyboards since the addition of the Windows key in 1994. The new key enables users to access a virtual AI assistant, engaging in conversations to aid in task completion. Notably, Microsoft is a major investor in OpenAI, the parent company of ChatGPT. We find this development intriguing and will closely observe whether such a change influences the initiation of a new PC refresh cycle.
Analysts Take Shots at Apple: Apple's stock faced a challenging week following significant downgrades from Wall Street research firms. While we typically refrain from commenting on such short-term assessments, given their limited perspective and potential deviation from the company's fundamental operations, the substantial impact on the market value of the world's largest company warrants acknowledgment. The downgrades cite concerns about potentially softer-than-expected iPhone and services sales, issues in China, and ambitious valuations as reasons for the pessimistic outlook. While we acknowledge these possibilities and understand the resultant weakness in the shares, we emphasize the transient nature of these assessments. Our investment approach doesn't hinge on predicting whether Apple will meet specific iPhone unit numbers in a given quarter.
Solid Year for the Automakers: Major automakers released year-end sales figures for 2023 this week. The numbers indicate a robust year for most major brands as the supply chain pressures and inventory shortages stemming from the pandemic began to ease. GM achieved its best year since 2019, with sales up over 14% year over year. While Ford's overall sales growth was more modest, it demonstrated notable expansion in its EV segment, driven primarily by increased sales of the F150 Lightning. Tesla, exceeding expectations, experienced a 38% growth for the year, with the Model Y anticipated to maintain its position as the world's best-selling car.
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