# 646 – 🎯 Target misses the target – The Average Joe
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    # 646 – 🎯 Target misses the target

    victorlei

    March 6, 2024

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    Good morning. One joy of remote work? You can live wherever you want. And for many Americans, that means putting some distance between their home and their office:

    • Stanford’s new study shows the average distance between a person’s home and office is now 27 miles — up from just 10 miles in 2019.

    • The share of people who live more than 50 miles from the office rose from 0.8% in 2019 to 5.5% in 2023.

    But those who relocated during the pandemic may be in for a long commute these days — as the share of fully remote workers has fallen from 50% at the pandemic’s peak to ~12% today.


    CRYPTO

    Bitcoin, The Asset That You Either Love, Hate, or Missed Out On Has Finally Broke New All-Time Highs

    Houston, Bitcoin has landed at its all-time high. We lost many along the way, but after 846 days, the world’s largest cryptocurrency finally broke a new record high, briefly surpassing $69K. But in true crypto style, volatility followed, with its price plunging 10% within hours. Still, plenty more fuel could be in the tank to take the $1.25T market cap crypto to Mars (and even beyond…).

    The BTC bump: Unlike the 2020 bull market, Bitcoin’s latest ascent is surprisingly devoid of influencers and grifters. Instead of Lambos and lavish parties, the industry has found a new crowd as Wall Street embraces the crypto ahead of one of its biggest events. Bitcoin has rallied over 320% since the collapse of FTX in Nov. 2022 — most of these gains came in recent months as US regulators approved the first spot Bitcoin exchange-traded funds (ETFs).

    • The ten approved ETFs have attracted over $24.3B in net deposits since their January launch, with BlackRock’s $IBIT ETF reaching $10B faster than any ETF in history.

    • Bitcoin could also soon challenge gold’s dominance, with Bloomberg’s Eric Balchunas tweeting that $BTC fund inflows are on track to surpass total gold ETF assets within two years.

    What’s next for the world’s most controversial asset?

    “This time is different” are four of the most dangerous words in investing… but this time really could be different. Wall Street’s stamp of approval has propelled $BTC to new heights — but what does that mean going forward?

    • Bitcoin influencer Dylan LeClair observed several instances in past bear markets when $BTC finally broke all-time highs; it doubled in the following weeks.

    • Investors are also preparing for Bitcoin’s fourth halving, historically seen as a bullish event that reduces the amount of new Bitcoin entering circulation by half.

    Rise of the rest: When Bitcoin booms, the rest of the crypto market tends to follow suit. Ethereum, the second-largest crypto, has climbed to its highest point since Apr. 2022. Meme coins are also rallying, with Dogecoin ($DOGE) up over 60% this week. The weirdness is likely to continue as people are once again shelling out millions for NFTs. So we think it’s fair to say…. we are so back.


    PARTNERED WITH RYSE

    Best Buy Introduces New Billion Dollar Smart Home Category

    The leading retail distributor of Smart Home products has recently unveiled a new addition to its smart home lineup, Smart Shades.

    There are A LOT of windows out there, and with only a 10% of them being automated, this is a market that’s already worth billions with projected double digit growth for the next decade.

    Recognizing this, Best Buy has made a huge bet on an innovative startup — stocking their product in 100+ stores.

    • This up-and-comer is RYSE, and for a limited time, you can invest in their vision of owning the Smart Shades industry.

    • Best Buy made similar bets on smart-home titans Ring and Nest, both of which saw billion-dollar exits at the hands of Amazon and Google.

    RYSE’s share price has grown over 20X since its founding, with significant room for growth as they capitalize on the increasing demand for its patented tech.


    LARGECAP RECAP

    🏘️ The real estate sector is healing

    With net total assets over $60B, the Blackstone Real Estate Investment Trust (Breit) is the world’s largest REIT — so when it froze withdrawals in late 2022 during the commercial real estate meltdown, it served as a warning for the entire sector. Two years later, Breit’s recent performance indicates that real estate is bouncing back.

    • For the first time since Nov. 2022, Blackstone was able to process all withdrawal requests from the Breit, with just $961M in withdrawal requests in Feb. 2024.

    • Blackstone said January withdrawal requests were $1.3B, ending a $15B exodus from the world’s largest REIT.

    The real (estate) impact: The substantial decrease in withdrawal requests suggests that Breit investors have more positive perceptions of the real estate market. However, concerns about commercial real estate persist on Wall Street, where talk of a potential bubble and new contagion continue, particularly as shares of New York Community Bancorp ($NYCB), which has exposure to commercial real estate, remain down 69% this year.

    🎯 Target’s revenue misses the mark as retail sales slow

    For the first time in seven years, retail giant Target ($TGT) reported a decline in annual revenue — with sales falling 1.6% from the previous year. The drop contrasts the successes of grocery superstores like Walmart ($WMT) and Costco ($COST), which have continued to grow as cash-conscious Americans juggle fixed budgets and 30-year highs in food costs.

    • The decline came as Americans spent less on discretionary purchases like beauty, electronics, and furniture — which have represented up to 80% of Target’s revenue in recent years.

    • Supply chain issues also hurt Target’s revenue in 2023, but the company’s effective inventory management helped lower costs, resulting in a 58% year-over-year rise in net earnings. 

    Sign of something bigger? US retail sales have been flat or decreasing in three out of the last four months — and an unexpectedly large 0.8% drop in January now has analysts questioning whether Americans are scaling back on spending as credit card delinquencies increase and budgets tighten. Overall, the US consumer spent big in 2023 — but 2024 may be a year of spending on essentials and paying down debt.


    JOE’S MARKET PULSE

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    Markets & Economy

    Gold future hit record high: Traders banking on rate cuts in the second half of this year sent gold to $2.1K. Adjusted for inflation, it reached $3.2K in 1980 — a lofty level that some analysts think is in the realm of possibility again as rate-cut expectations ramp up. [Read]

    Apple’s ($AAPL) China troubles mount: iPhone sales have dropped 24% in China so far this year as the country’s smartphone market shrinks and Shenzhen-based Huawei’s smartphones win over more Chinese consumers. Now, Apple hopes its efforts in AI and VR will offset slowing smartphone sales. [Read]

    Excessive drinking caused 500 deaths per day during pandemic: In 2020-21, alcohol-related deaths were up 29% compared to 2016-17, underscoring yet another secondary effect of a stressful, isolating couple of years. [Read]

    Business & Wealth

    Consumer Financial Protection Bureau to cap credit card late fees at $8: Card issuers have exploited a loophole in the 2009 Card Act for years, charging higher and higher junk fees. This new rule will provide a cap — unsurprisingly, credit card companies are pushing back. [Read]

    US bars AMD ($AMD) from exporting chip to China: Though AMD says the new chip performs at a lower level than chips aimed at US markets, the Commerce Department still says the chip is too powerful to send to China without a license. [Read]

    Meta’s ($META) social networks were down yesterday: Hundreds of thousands of users got a (perhaps needed?) break from scrolling Instagram reels and Facebook posts during an extended outage — and then they took to X to vent about it. [Read]

    *Thanks to our sponsors for keeping the newsletter free.


    CHART


    DIGIT OF THE DAY

    Interest Payments on Non-Mortgage Debts Approach $573.4B, Comparable to Mortgages

    Mortgage payments may no longer dominate the interest expense sheet, and things are about to get a lot more interest-ing for US households. In 2024, declining home affordability and higher interest rates have many Americans skipping home ownership to prioritize more urgent non-mortgage expenses.

    • According to the Bureau of Economic Analysis, annual non-mortgage interest payments reached $573.4B in January — nearly reaching the $578B in annual mortgage interest paid by households as of the last quarter of 2023.

    • At this rate, Americans could soon be paying more interest on credit, auto, and student debt than on mortgages — signaling a significant shift in household debt throughout the generations.

    The debt dive: LendingTree notes that Americans now pay an average of $1,583 monthly in debt payments, up from $1,233 in 2020. Rising borrowing costs have made credit cards and auto loans more expensive, leading to higher debt payments — and increased delinquencies. But, despite concerns about potential defaults, the overall outlook suggests that most households will be able to manage… at least for now.


    EXTRA JOE

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