🛍 Black Friday cleaned up

What’s going on here?

Rich and luscious online Black Friday sales left retailers swimming in cash.

What does this mean?

Black Friday traditionalists might make a habit of lining up outside stores at the crack of dawn, but most modern shoppers prefer browsing thirty tabs while gnawing on a leftover turkey leg. Case in point: US shoppers spent nearly $10 billion on online shopping this Thanksgiving season according to Adobe analytics, 7.5% more than the same time last year. Now, some of that increase could well be down to the impact of this year’s higher prices, even after discounts. But because inflation’s made folk more budget-conscious, Americans likely seized the chance to do their pent-up spending and holiday shopping when price tags were smaller than usual. With that out of their system, though, retailers may be a lot quieter for the rest of the year.

Why should I care?

For markets: Pay up (please).

A lot of that spending was probably charged to credit cards, making those stocking fillers next month’s problem. But that could be a problem indeed: today’s interest rates are as high as they were in pre-crisis 2007, making payments more expensive to keep up with. Now, banks wouldn’t turn down a few pricey interest payments on outstanding debts, of course. But the number of credit card delinquencies – that’s debt payments over a month late – are now sitting at a level last seen back in 2012, an ominous sign for the personal borrowing industry.

The bigger picture: Life in plastic, it’s fantastic.

Roughly 1% of every single swipe – including the virtual ones – goes straight to banks and payment firms like Visa, Stripe, and Mastercard. And sure, they can’t get their grubby hands into stores’ money drawers, but only around a fifth of all global spending is still done with cash, down from roughly half in 2007. That trend is only headed in one direction, so it’s no wonder shares of Visa and Mastercard are at all-time-highs, then.

What’s going on here?

Investors powered up gold’s price to reach above $2000.

What does this mean?

Gold’s a go-to place to stash cash when the wider environment turns dicey, because it tends to hold its value throughout inflation, global turmoil, and currency dips. So now that financial systems are feeling the strain of het-up interest rates, investors and central banks alike are stocking up on gold. But that’s not the only reason investors are keener than usual. See, gold doesn’t dish out income like stocks and bonds, so when high interest rates make income-producing assets look more rewarding, the metal tends to get the cold shoulder. But the opposite’s true when rates are lower, and now that Wall Street’s whispering about interest rate cuts, investors are buying up gold in anticipation of a turnaround. The result: the price of gold crept above the $2,000 mark, landing just $60 shy of the record $2,072 from 2020.

Why should I care?

For markets: Not quite liquid gold.

Not every commodity thrives in downturns. Brent crude has slipped for five weeks straight to end up roughly a fifth lower than its October high. That’s partly because supply’s been plentiful, but China’s lackluster recovery has also meant the world’s biggest buyer of crude oil has been drinking less of the stuff than usual. So all eyes will be on OPEC this Thursday, when the group of oil-producing nations will discuss the state of their production cuts.

The bigger picture: Destination diversification.

Despite inflation showing signs of defeat and the economy staying strong so far, the risk of seeing the opposite – sticky inflation and sluggish economic growth – is still looming. That “stagflation” scenario can be kryptonite for traditional portfolios: stocks end up squeezed while bonds’ regular payouts whittle away. But you guessed it: that’s exactly the environment when you might want hardy gold in your portfolio.