Three Things (12/23)

Shutdown averted

Capitol compromise … In a dramatic last-minute effort, Congress passed a short-term funding bill, narrowly avoiding a government shutdown as the clock struck midnight. President Joe Biden signed the measure early Saturday, extending federal funding through March 14 and securing $100 billion for disaster aid alongside $10 billion for farmers.

The path to compromise was fraught with contention. President-elect Donald Trump, with backing from Elon Musk, derailed earlier bipartisan agreements by demanding a debt ceiling increase. That proposal, which would have extended borrowing limits into the new year, was excluded in the final 118-page legislation. An earlier version of the bill was 1,500 pages.

House Speaker Mike Johnson faced intense pressure from both sides. After Trump’s demands failed to gain traction among conservatives, Johnson pivoted. The revised bill passed the House in a 366-34 vote and cleared the Senate 85-11 just in time. Democrats supplied the majority of votes for passage, despite some grumbling over what was left out.

US government spending by category in FY 2024. Source: U.S. Treasury

Notably absent from the final package were provisions for pharmacy benefit reform, funding for pediatric cancer research, and stricter rules against junk fees. A proposed cost-of-living adjustment for lawmakers was also slashed to get the deal over the line.

While Republicans avoided an unpopular shutdown, they conceded their bid to preemptively resolve the looming debt ceiling debate. This signals potential turbulence ahead as Congress wrestles with broader fiscal priorities in 2025. For now, the deal provides relief—but the underlying tensions remain unresolved.

Party’s over

Retail reckoning … Retailer Party City (PRTY) announced it will shutter nearly 700 stores, marking the second bankruptcy filing in two years. Despite restructuring efforts in 2023, the company cited inflation and dwindling consumer spending as insurmountable challenges. Party City plans to retain most of its 12,000 employees to assist with its winding-down process.

The retail apocalypse doesn’t stop there. Discount chain Big Lots is also closing its remaining stores following a failed sale, unable to withstand competitive pressures and high inflation. This year alone, over 7,100 retail stores have closed—a staggering 69% increase from 2023, according to CoreSight Research.

Big Lots joins other household names like Joann Fabrics, Tupperware, and Express, all of which folded in 2024. Many attribute these closures to changing consumer habits and competition from retail titans like Amazon (AMZN). While traditional retailers falter, Amazon’s convenience and pricing continue to dominate.\

Commonalities among these struggling companies include outdated business models, mounting debt, and reliance on discretionary spending. Meanwhile, companies embracing e-commerce and adaptable inventory models, like Target (TGT) and Walmart (WMT), thrive. The success of pop-up stores, such as Spirit Halloween, highlights a demand for niche, timely offerings.

Semiconductor showdown

Chip clash … The legal battle between chipmakers Qualcomm (QCOM) and Arm (ARM) reached a partial conclusion, as a U.S. federal jury in Delaware determined that Qualcomm did not breach its licensing agreement with Arm following its $1.4 billion acquisition of startup Nuvia in 2021. While Qualcomm celebrated the decision, calling it a validation of its right to innovate, Arm vowed to seek a retrial.

At the center of the dispute is the licensing of Arm’s chip architecture. Arm claimed Qualcomm leveraged Nuvia’s technology under preexisting agreements that should have been renegotiated after the acquisition. The jury sided with Qualcomm, finding its chips—built with Nuvia technology—properly licensed under Qualcomm’s agreement with Arm. However, the jury was deadlocked on whether Nuvia itself breached its terms, leaving the case open to further legal challenges.

For Qualcomm, this verdict solidifies its push into the laptop chip market, particularly in AI-driven computing—a competitive space against rivals like Nvidia and AMD. Arm’s stock dropped 1.8% after the news, while Qualcomm’s gained 1.8%, per Reuters reporting.

Stock performance in 2024 reflects these dynamics. Qualcomm’s focus on diversification has sustained its share price amid market shifts, though challenges remain in smartphone sales. Meanwhile, Arm’s IPO earlier this year saw early excitement fade as concerns over market competition grew.

One more thing: Consumer Reports has released a list of the most satisfying—and most reliable—car brands of 2024. Topping the most satisfying rankings: Rivian (RIVN), BMW, and Tesla (TSLA). The top three most reliable brands cited were: Subaru, Lexus, and Toyota (TM).

Disclosures:

As of writing, NVDA and AMD are holdings in Titan's Flagship strategy. TSLA is a 0.62% holding in the ARK Venture Fund.

Advisory services are offered by Titan Global Capital Management USA LLC (“Titan”), an SEC-registered investment adviser. Newsletters provided by Titan reflect the opinions of only the authors who are associated persons of Titan and do not necessarily reflect the views of Titan, or any of its affiliates. They are meant for educational and informational purposes only and are not intended to serve as investment advice or a recommendation to trade any security. They are also not research reports and are not intended to serve as the basis for any investment decision. The information provided does not take into account the specific objectives, financial situation, or particular needs of any specific person. Any third-party information provided therein does not reflect the views of Titan. All hyperlinks to third-party sites are provided ‘AS IS’ for informational purposes only. Titan does not necessarily agree with, endorse, edit, or sponsor the content on these external websites. Titan is not responsible for the accuracy, completeness, or reliability of the information on third-party sites. All investments involve risk, including the potential loss of principal. Past performance does not guarantee future results or returns. Investors should consider their investment objectives and risks carefully before investing. 

Titan newsletters are curated digests of business news stories delivered frequently. Titan newsletters’ goals are to make business and financial news accessible to all. The Titan newsletter team has editorial independence. Authority over all news decisions that appear in Titan newsletters, including what news we cover, our tone, and any accompanying media, lies with the Titan news team. Titan newsletter editors conduct daily research through a variety of primary (e.g., press releases, financial reports, public statements, economic data, social media accounts, interviews, etc.), and secondary sources (e.g., Fortune, The Wall Street Journal, The New York Times, Bloomberg, CNBC, TechCrunch, Jalopnik, Business Insider, Fox Business, etc.). The editors then determine the stories to be featured, covering a mix of headline news as well as less reported, yet relevant stories. Titan can’t cover everything, but the Titan newsletters aim to deliver a well-rounded serving of news. Titan newsletters make every attempt to report the facts fairly and accurately and provide “takeaways” based on our understanding of the trends, our business experiences, and our personal opinions. We deliver the information and our perspective so you can assess the news critically. Titan newsletters may contain forward-looking statements, which reflect the author’s current views with respect to future events and financial performance. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. We do not undertake any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise.

Certain investments may not be suitable for all investors based on their investment objectives and risk tolerance. Investments with exposure to crypto assets are only suitable for investors who are willing to bear the risk of loss and experience sharp drawdowns, as they still carry inherent risk associated with cryptocurrencies. You are solely responsible for evaluating the merits and risks associated with the use of any information, materials, content, user content, or third party content provided before making any decisions based on such content.

If there are substantive errors when published, corrections will appear in the following day’s material or within a business day of discovery of the error. When Titan or the author of a newsletter owns stock in a company mentioned, we’ll disclose it at the bottom of our newsletter. For more information, visit titan.com/legal.