🥾Western boots demand surges

Good morning Investor. "The only limit to our realization of tomorrow will be our doubts of today."

— Franklin D. Roosevelt

MARKET UPDATE

Gold prices have continued their astronomical surge, reaching an intra-day high of $2,398.81 per troy ounce.

TODAY’S BIG HEADLINES

• Western boots demand surges

• Oil prices behave erratically

• Investment banks shock Wall Street

• Golfing is back, and its here to stay

RETAIL INDUSTRY

Western boots demand surges 🥾

Riding The Trends: Hold onto your hats, folks! Cowboy boots are not just back in style, they’re galloping down Main Street. Sales of these rustic charmers have seen a 20% uptick week-over-week. This resurgence in cowboy chic has been affectionately dubbed the “Beyonce Bounce”, largely spurred by the release of her latest album, ‘Cowboy Carter’.

Retailers Saddle Up: A slew of retailers are poised to reap the benefits of this shift in consumer tastes. After all, the cowboy aesthetic isn’t just about the boots - it’s a head-to-toe commitment, denim included. Earlier this year, Louis Vuitton (LVMH) tipped its hat to this trend, launching an American Western line at Paris Fashion Week. The runway was a veritable Wild West, with models sporting everything from cowboy hats to bolo ties. Boot Barn (BOOT) is also hoping to lasso in female shoppers with its range of western-themed apparel. Meanwhile, Levi Strauss (LEVI), the undisputed king of denim, could also see a boost. As CEO Michelle Gass recently told analysts, “Our brand remains at the heart of culture.” And what’s more cultural than a cowboy comeback?

Stock Market Whispers: This trend has also spurred some interesting movements in the stock market. Levi’s stock has risen 21% year-to-date, thanks in part to this western wave. Louis Vuitton isn’t far behind, with a nearly 9% increase. But the real dark horse here is Boot Barn. This western-themed retailer has seen the largest gains this year, with its stock up a whopping 30%. So, it seems the wild west is winning on Wall Street too!

sources: (CNBC), (Investing.com)

MACROECONOMICS

Oil prices behave erratically🛢️

Wait, It Did What?: In a surprising turn of events that has left analysts scratching their heads, oil prices have taken an unexpected nosedive, defying the widespread belief that Iran's aerial assault on Israel over the weekend would send them soaring. Brent prices did initially spike to $92.18, their highest since October, as the world braced for a potential retaliatory strike from Israel. However, once it became clear that Iran's attack was less damaging than initially anticipated, prices decided to go on a slippery slope.

The Slick Decent: On Tuesday morning, Brent futures for June delivery fell by 33 cents, a 0.4% decline, sliding down to $89.77 a barrel. Not to be outdone, U.S. crude for May also took a 38-cent tumble, a 0.4% decline that left it languishing at $85.03. It seems that even the prospect of Middle Eastern tensions couldn't keep oil prices from slipping on this proverbial banana peel.

Supply Glut Concerns: Supply concerns in the middle east have been easing, largely due to the decreasing likelihood that Israel will mount a retaliatory attack on Iran, a major oil producer that churns out as much as 3 million barrels per day. With tensions seemingly cooling off, the fear of supply disruptions has dissipated quicker than a mirage in the desert.

The Chinese Factor: Adding to the mix is China's economy, which grew faster than expected in the first quarter, clocking in a 5.3% GDP growth thanks to its manufacturing sector's impressive performance.

The American Dream (of Lower Interest Rates) Fades: As if the oil market didn't have enough surprises up its sleeve, robust US retail sales figures for March, largely driven by the unstoppable force of online shopping, have further solidified the narrative that the Fed will be in no rush to cut interest rates. This scenario, which could dampen the prospects for oil demand, has left oil prices feeling as deflated as a punctured tire.

sources: (reuters), (bloomberg)

EARNINGS RESULTS

Investment banks shock Wall Street 🏛️

Asset Attraction: On a sunny Monday, two financial titans, Goldman Sachs (GS) and Charles Schwab (SCHW), unveiled their first-quarter earnings. Both bulldozed the Street’s estimates, sending a clear signal that the asset management industry is not just alive and kicking, but doing the financial equivalent of a victory dance.

Golden Goldman: Goldman’s earnings report was the star of the show, outshining expectations on both the top and bottom line, thanks to its deal-making expertise. The Street had braced for revenue of $12.89 billion, up 5.46% YoY, and earnings per share of $8.66, down 1.48% YoY. But Goldman, like a magician pulling a rabbit out of a hat, reported a sales growth of 28% and earnings that hit their highest level since 2021, growing 28% YoY to $11.58 per share. This was largely due to a 32% increase in investment banking fees from underwriting deals and bond trading. It seems Goldman’s golden goose is still laying those golden eggs!

Schwab’s Saga, A Tale of Two Halves: Schwab’s revenue for the first quarter was in line with analyst estimates, while EPS surpassed analyst estimates by 3.3%. These results were fuelled by higher asset management fees and client assets reaching record highs. But, as they say, every coin has two sides. Despite these impressive figures, Schwab’s business has seen better days, with overall profit at the brokerage shrinking 15% to $1.36 billion, resulting in an adjusted EPS of $0.74, lower than last year’s $0.93.

Stock Market Whispers: Shares of Goldman Sachs shot up 5.8% at the open, like a golfer’s perfect drive, but then traded down with the broader market, much like a wayward putt. Meanwhile, shares of Charles Schwab managed to hold on to some of their gains after an initial 4.3% surge, ending the day up 1.7%. It seems the stock market is more of a rollercoaster ride than a leisurely stroll in the park!

sources: (Yahoo), (Reuters), (SimplyWallSt)

MEGA CAPS

Golfing is back, and its here to stay👑

The Second-Coming: Over the weekend, the hallowed greens of Augusta, Georgia played host to the Masters Tournament. Amidst the perfectly manicured fairways, Scottie Scheffler was busy crafting his legacy. With a swing as smooth as butter on a hot summer day, Scheffler clinched his second Masters win in three years, firmly establishing himself in the golfing pantheon. This wasn’t just a victory for Scheffler, but a hole-in-one for the entire golf industry.

The Callaway Effect: Analysts are tipping their hats to off-course driving ranges for giving golf a much-needed facelift. The sport, once considered the playground for the wealthy and the aged, is now attracting a younger, more diverse audience. The days when golf was synonymous with old, affluent white men are as extinct as a dodo. The largest off-course driving range, the Callaway-owned TopGolf (MODG), has seen its popularity skyrocket faster than a well-struck drive, with a whopping 2023 revenue of $1.76 billion, a 14% increase year-over-year. The golf industry has welcomed an additional 2 million new enthusiasts since 2019, while the number of visitors to these off-course experiences reached a staggering 32.9 million in 2023, a 41% increase since the pre-pandemic levels in 2019.

Stock Market Whispers: Despite the booming popularity, this hasn’t quite translated into a bull run for Callaway TopGolf’s shares. The stock is up a modest 10% for the year, but down 29% over the past twelve months. Emblematic of a golfer who’s great on the driving range but can’t quite bring it to the course. It remains to be seen if the stock is on the verge of a turnaround

sources: (SBJ), (WashingtonPost)

MORE NEWS

Additional market-moving events🌎

• WFH Kills Innovation: Nike’s CEO has come out blaming remote work for its lack of innovation and recent sales struggles. Last year, the retailer reversed course on its long term direct-to-consumer strategy. (HRD)

• Ryzen Gets An Upgrade: AMD rolls out its latest chips for AI PCs as competition with Nvidia and Intel heats up. The company is the first to launch a Pro desktop PC chip with an NPU for AI workloads. (TH)

• No More Free Stuff: Peloton has officially scraped its free unlimited plan just a year after its launch, sending shares plunging. (CNBC)

• UNH Wins Again: United Health crushes earnings expectations by beating top and bottom line estimates, sending its share price up over 5%. (SeekingAlpha)

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