Three Things (12/27)

Holiday receipts

Retail surprise … Holiday shopping proved resilient this year, with spending from Nov. 1 through Dec. 24 rising 3.8% year-over-year, according to Mastercard (MA) data. The figure outpaced forecasts of 3.2% and last year’s 3.1% increase, showcasing consumer eagerness to capitalize on discounts.

Online shopping led the charge, growing 6.7%, while in-store sales saw a more modest 2.9% gain. Electronics, jewelry, and clothing were standout categories, boosted by steep promotions and an appetite for upgraded gadgets and affordable luxuries like lab-grown diamonds. Notably, the final five days of the season accounted for 10% of total sales.

Despite inflationary pressures, consumers had a healthy appetite for spending, largely driven by value-hunting. Retailers leaned heavily into promotions to attract shoppers wary of high prices. Walmart and Target ramped up price cuts, while online platforms dominated with convenience and deals.

The strong performance highlights a robust job market and rising wages, but questions linger about sustainability. Experts caution that heavy discounting may have pulled future spending forward. “The big question will be, what happens next?” noted Michelle Meyer, Mastercard’s chief economist.

Apple eyes $4 trillion

On the brink … Apple (AAPL) is closing in on an unprecedented $4 trillion market capitalization, driven by investor confidence in its AI advancements and a fresh wave of iPhone upgrades. This milestone positions Apple ahead of tech heavyweights Microsoft (MSFT) and Nvidia (NVDA).

The recent 16% surge in Apple’s stock since November added $500 billion to its market value, bolstered by expectations of an AI-driven “supercycle” of iPhone upgrades. These developments have helped Apple rebound from criticism of its slow AI adoption and stand as a testament to the company’s staying power in a competitive sector.

To put $4 trillion in perspective, Apple’s valuation rivals the GDPs of global economic powerhouses like Germany ($4.6 trillion) and Japan ($4.1 trillion) and surpasses those of the UK and France. It’s a staggering measure of Apple’s influence, not only as a tech leader but as a market-defining entity.

This milestone underscores Apple’s role in shaping market trends while reflecting the growing centrality of AI in tech innovation. As 2025 approaches, analysts expect revenue growth and expanded AI capabilities to fuel further momentum.

AI’s regional ripple

Economic evolution … New research from the New York Times highlights a major economic shift fueled by generative AI. While tech hubs like Silicon Valley have been the primary beneficiaries, the study finds unexpected promise in smaller cities such as Chattanooga, Tenn., and Scranton, Penn. These areas boast affordable housing, educated workers, and industries less susceptible to automation, making them poised for growth.

AI is expected to reshape America’s economic geography, much like the industrial revolution or suburban boom of the 20th century. Rural economies could see benefits such as improved productivity in agriculture and expansion of hyperscale data centers. However, challenges like limited high-speed internet and fears of job displacement persist, exacerbating urban-rural divides if unaddressed.

Still, Chattanooga illustrates the possibilities. With some of the world’s fastest internet, it is attracting start-ups like Truck Parking Club and Shappi, which use AI to streamline logistics. The city government is also harnessing AI, training it to assist with local regulations. Such efforts may position Chattanooga as a leader in tech-driven economic revitalization.

As AI’s reach extends, cities outside traditional tech powerhouses may claim a growing share of the benefits. The challenge will be ensuring all regions have the tools to compete effectively.

One more thing: New data from the Labor Department finds that it’s taking longer for unemployed people to find their next job. This is based on recurring applications for unemployment benefits, which are at the highest they have been in three years.

Disclosures:

As of writing, NVDA, MSFT, MA, GOOG and AAPL are holdings in Titan's Flagship strategy.

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