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Tag: Food/Beverages/Tobacco

  • $3,000 gold and more outrageous market predictions investors shouldn’t brush aside.

    $3,000 gold and more outrageous market predictions investors shouldn’t brush aside.

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    Monday served as another smackdown for investors who are banking on a Goldilocks economy and a less aggressive Fed.

    Some are now not ruling out a Grinch-like turn from the central bank — a 0.75% hike next week instead of the 0.50% markets have been pinning hopes on — following strong data on services, jobs and wages.

    It all goes along with the theme of 2022 — expect the unexpected. The relief of moving out of a crippling pandemic was quickly replaced by the biggest war on Europe’s shores in decades, that sparked worldwide inflation surges.

    What comes next is anyone’s guess and that brings us to our call of the day via Saxo Bank’s annual “Outrageous Predictions” for 2023.

    While some of these will sound crazy, note that the Saxo team, led by Chief Investment Officer Steen Jakobsen, have nailed a few wild prophecies in the past decade. Those include: a Brexit prediction in 2015, a 25% drop for the S&P 500 from its 2007 high in 2008, a tripling of Bitcoin’s value forecast in 2017.

    The focus for 2023’s prediction is that “a return to the disinflationary prepandemic dynamic is impossible because we have entered into a global war economy, with every major power across the world now scrambling to shore up their national security on all fronts; whether in an actual military sense, or due to profound supply-chain, energy and even financial insecurities that have been laid bare by the pandemic experience and Russia’s invasion of Ukraine,” says Jakobsen.

    As for those predictions, here we go:

    • Gold crosses $2,075 then rockets to $3,000 on unstoppable inflation. “Fed policy tightening and quantitative tightening drives a new snag in U.S. treasury markets that forces new sneaky ‘measures’ to contain Treasury market volatility that really amounts to new de facto quantitative easing,” says Saxo. And China’s end of zero-COVID drives up demand, commodity prices and inflation.

    • Widespread price controls to cap official inflation due to war economy mentality. “In 2023, expect broadening price and even wage controls, maybe even something like a new National Board for Prices and Incomes being established in the U.K. and the U.S.,” said Saxo. Market fallout? Fuel for gold’s
      GC00,
      +0.19%
      climb.

    • There’s a new reserve asset in town. Non U.S.-allied countries move away from the U.S. and IMF to create an “international clearing union (ICU) and a new reserve asset, called the Bancor (currency code KEY)” that borrows from economist John Maynard Keynes idea of resisting U.S. power over the international monetary system. Nonaligned central banks slash U.S. dollar reserves, Treasury yields soar and the dollar
      DXY,
      +0.09%
      drops 25% against a basket of currencies that trade with Bancor.

    • Japan pegs USDJPY to 200. Pressure intensifies on the already weak yen
      USDJPY,
      +0.04%
      into 2023 as currency intervention fails and inflation soars. The government resets the financial system, erasing all debt, recapitalizing banks, as trillions of yen return to Japan shores. But the yen still weakens by year-end.

    • A $10 trillion-dollar Manhattan project. A team of major tech leaders form a mega research-and-development effort for energy infrastructure and ground-breaking technologies — the Third Stone. Companies tied to the project soar in an overall weak environment for investing.

    • Tax haven ban kills private equity. The OECD launches a full ban on the biggest tax havens in the world in 2023 and in the U.S., carried interest tax as capital gains is shifted to ordinary income. It’s a body blow for private equity and venture capital — the valuation of publicly listed private-equity firms fall 50%.

    The rest of their predictions are here, such as the formation of an EU Armed Forces in 2023 and an “UnBrexit” referendum.

    Read: Why Monday’s stock-market rout should be a wake up call for investors

    The markets

    MarketWatch

    Stocks
    DJIA,
    -0.96%
     
    SPX,
    -1.40%
     
    COMP,
    -1.77%
    are drifting into the red, with Treasury yields
    TMUBMUSD10Y,
    3.571%
     
    TMUBMUSD02Y,
    4.395%
    steady, the dollar
    DXY,
    +0.09%
    lower and oil
    CL.1,
    -3.43%
     
    BRN00,
    -3.73%
    also down.

    For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

    The buzz

    BioVie stock
    BIVI,
    -18.43%
    is climbing after positive results from the clinical-stage biopharmaceutical company on a drug for Parkinson’s and Alzheimer’s.

    NRG Energy
    NRG,
    -15.79%
    agreed to buy Vivint Smart Home
    VVNT,
    +32.31%
    in a $5.2 billion deal. Vivint shares are soaring.

    MEI Pharma
    MEIP,
    -33.52%
    shares are tumbing after drugmaker said it would stop developing cancer treatment zandelisib outside of Japan and announces job cuts. Herbalife shares
    HLF,
    -18.85%
    are down 10% after an offering of convertible notes 

    Powell Industries
    POWL,
    +19.11%
    stock is up 9% after the electrical equipment maker’s well-received results and new orders. Within software Sumo Logic
    SUMO,
    +11.65%
    and GitLab shares
    GTLB,
    +5.71%
    are surging on upbeat results and forecasts.

    Layoffs extending beyond tech? PepsiCo 
    PEP,
    -0.86%
    is reportedly cutting hundreds of workers at its North American headquarters.

    Home builder Toll Brothers
    TOL,
    -1.56%
    will report results after the close.

    The October trade deficit jumped 5.4% to $78,2 billion.

    The U.S. and EU are reportedly considering fresh steel and aluminum tariffs on China to fight carbon emissions.

    Best of the web

    “Nothing to be glad about.” An empty, lonely and cold formerly occupied Ukraine city.

    Morocco’s World Cup team leans on its secret weapon of parents in the stands.

    Why human composting could be the next big thing.

    The chart

    Headed into the holidays, consumers are using savings and credit, says a team of Jefferies analysts led by Corey Tarlowe. “The savings rate continues to trend lower and credit card balances are growing +15% Y/Y. We believe these trends indicate that the consumer is stretched.”

    Against this backdrop, they like Costco
    COST,
    -1.34%    ,
    Dollar General
    DG,
    -1.52%    ,
    Target
    TGT,
    +0.13%
    and Walmart
    WMT,
    -0.98%    .


    FactSet/Jefferies

    The tickers

    These were the top-searched tickers on MarketWatch at 6 a.m.:

    Ticker

    		 Security name
    TSLA,
    -2.00%         		Tesla
    GME,
    -5.32%         		GameStop
    AMC,
    -9.00%         		AMC Entertainment
    NIO,
    +2.37%         		NIO
    BBBY,
    -8.86%         		Bed Bath & Beyond
    AAPL,
    -1.83%         		Apple
    APE,
    -5.40%         		AMC Entertainment Holdings preferred shares
    COSM,
    -17.49%         		Cosmos
    AMZN,
    -2.26%         		Amazon.com
    MULN,
    -3.08%         		Mullen Automotive
    Random reads

    Tributes pour after “Cheers” star Kirstie Alley dies at 71.

    Happy 190th birthday to the world’s oldest tortoise.

    A green Grinchy dog for Christmas? Not everyone’s heart grew three sizes.

    Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

    Listen to the Best New Ideas in Money podcast with MarketWatch reporter Charles Passy and economist Stephanie Kelton

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  • Inflation and credit-card debt are on the rise, despite a strong job market. Tell us how the economy is affecting you.

    Inflation and credit-card debt are on the rise, despite a strong job market. Tell us how the economy is affecting you.

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    We want to hear from readers who have stories to share about the effects of increasing costs and a changing economy. If you’d like to share your experience, write to readerstories@marketwatch.com. Please include your name and the best way to reach you. A reporter may be in touch.

    For many people living in the U.S., these are tough — and confusing — times.

    On Friday, the Labor Department reported 263,000 new jobs in November, while the unemployment rate held steady at 3.7%. Layoffs remain low, despite mass job cuts in the tech sector. Average hourly wages have also risen 5.1% in the past year, but still lag behind inflation for many workers. And there were 10.3 million job openings in October — slightly down from the previous month’s 10.7 million. 

    Some people might see the latest economic data as both challenging and confusing.

    After all, the cost of living rose 7.7% on the year in October. The once red-hot housing market is finally cooling, thanks to mortgage rates that have more than doubled over the last year amid the Federal Reserve’s attempts to rein in inflation, and rents, while moderating, have surged from pre-pandemic levels. Borrowing money to cover increased precarity is becoming more expensive too, with the average credit-card APR at 19.2% as of Nov. 30, according to Bankrate.

    “‘It’s just mind-boggling, the disconnect that we’ve seen.’”

    Given all the conflicting signals, economists say it can be difficult for consumers to know exactly how to feel about the economy right now. “It’s not new, this disparity between the actual facts on the ground about what’s going on in the economy and the sentiment,” said Heidi Shierholz, president of the Economic Policy Institute, a left-leaning think tank. 

    “I remember this summer it was just unambiguously the strongest jobs recovery we’ve had in decades,” she added. “There’s just absolutely zero chance that we were in a recession — not only were we not in a recession, we were in just an extraordinarily fast recovery — and the polling, a huge share of people actually thought we were in a recession. It’s just mind-boggling, the disconnect that we’ve seen.”

    Still, the fact that inflation is eating into people’s savings — and that essential goods like food, energy and housing have spiked in cost — is bound to make many people unhappy. 

    Struggling to pay for rent and food

    “Going into the pandemic, more than seven out of every 10 extremely low-income renters were already spending more than half of their income on rent. And then the pandemic hits; we saw a lot of low-wage workers lose their jobs and see an income decline,” said Andrew Aurand, vice president for research at the National Low Income Housing Coalition. “Then in 2021, we see this huge spike in prices. For a variety of reasons, they’ve struggled for a long time, and since the pandemic, it’s gotten even worse.”

    Moderate-income Americans are struggling too. Maybe you can’t afford your favorite family meals, as the price of grocery store and supermarket purchases has jumped by 12.4% from last year. Or maybe you’re putting off a trip to see family this holiday season thanks to the higher cost of airfare, or you’re worried about losing your job as some business leaders warn of a recession. Perhaps you’re forced to rely on credit cards and personal loans, as credit-card debt is up 15% from a year ago.

    MarketWatch has chronicled many of these changes, detailing renters’ frustrations, families’ tough choices at the grocery store, and the reality faced by would-be home buyers sidelined by higher rates and dwindling affordability. 

    But we would like your help telling an ongoing story about the American economy, centering the experiences of everyday people. Our readers know better than anyone about how today’s economic conditions have impacted their daily lives.

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  • Tyson recalls 93,000 pounds of beef contaminated with a ‘mirror-like material’

    Tyson recalls 93,000 pounds of beef contaminated with a ‘mirror-like material’

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    Tyson Fresh Meats, a division of Tyson Foods Inc.
    TSN,
    +0.20%    ,
    is recalling 93,697 pounds of ground beef over a possible contamination with a “mirror-like material.”

    According to the U.S. Department of Agriculture’s Food Safety and Inspection Service, the ground beef items were packaged on Nov. 2, and the issue was discovered after several customers found this mirror-like material in their meat after purchasing it from a grocery store.

    The products part of the Tyson recall are as follows:

    • 10-pound chubs containing “Hill Country fare ground beef 73% lean/27% fat with best before or freeze by: Nov. 25, 2022.”

    • 5-pound chubs containing “Hill Country fare ground beef 73% lean/27% fat with best before or freeze by: Nov. 25, 2022.”

    • 5-pound chubs containing “H-E-B ground chuck ground beef 80% lean/20% fat.”

    The USDA advises individuals who purchased these items to throw them away or return them to the place of purchase immediately. The impacted products were sold in retail grocery stores in Texas.

    The specific labels for the ground beef that Tyson is recalling can be found here.

    See: Flying with Thanksgiving food? TSA dishes up rules for traveling with foodstuffs this holiday season

    It’s been a tough time for meat lovers: Last week, the CDC warned that many people should “not eat meat or cheese from any deli counter” unless it was “steaming hot” due to a listeria outbreak.

    But there could be some more meat alternatives on the horizon.

    The Tyson recall news came as the Food and Drug Administration (FDA) announced on Thursday that meat grown in a laboratory setting is safe for human consumption.

    “Advancements in cell culture technology are enabling food developers to use animal cells obtained from livestock, poultry, and seafood in the production of food, with these products expected to be ready for the U.S. market in the near future.,” the FDA said. To be clear, such products are not yet on the U.S. market, but they have now received this preliminary vote of regulatory confidence.

    And earlier this week, the CFO of Tyson Foods apologized to investors during a company earnings call over his arrest early on the morning of Nov. 6 after being found sleeping in a house that wasn’t his. 

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  • World Cup organizers in Qatar will reportedly ban beer sales at all eight stadiums

    World Cup organizers in Qatar will reportedly ban beer sales at all eight stadiums

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    DOHA, Qatar (AP) — World Cup organizers will ban the sale of all beer with alcohol at the eight stadiums used for the soccer tournament, a person with knowledge of the decision told The Associated Press.

    The decision comes only two days before games start in Qatar and 12 years after the country first consented to respect FIFA’s commercial partners.

    Non-alcoholic beer will still be available for fans at the 64 matches, the person said.

    The person spoke on condition of anonymity because organizers have not yet announced the decision.

    Champagne, wine, whiskey and other alcohol is still expected to be served in the hospitality areas of the stadiums. Outside of those places, beer is normally the only alcohol sold to regular ticket holders.

    Ronan Evain, the executive director of the fan group Football Supporters Europe, called the decision to ban beer sales at the stadiums “extremely worrying.”

    “For many fans, whether they don’t drink alcohol or are used to dry stadium policies at home, this is a detail. It won’t change their tournament,” Evain wrote on Twitter. “But with 48 (hours) to go, we’ve clearly entered a dangerous territory — where ‘assurances’ don’t matter anymore.”

    While a sudden decision like this may seem extreme in the West, Qatar is an autocracy governed by a hereditary emir, who has absolute say over all governmental decisions.

    Qatar, an energy-rich Gulf Arab country, follows an ultraconservative form of Islam known as Wahhabism like neighboring Saudi Arabia. However, alcohol sales have been permitted in hotel bars for years.

    Qatar’s government and its Supreme Committee for Delivery and Legacy did not immediately respond to request for comment.

    Already, the tournament has seen Qatar change the date of the opening match only weeks before the World Cup began.

    Budweiser’s parent company, AB InBev
    ABI,
    +1.28%

    BUD,
    -0.05%    ,
    pays tens of millions of dollars at each World Cup for exclusive rights to sell beer. and has already shipped the majority of its stock from Britain to Qatar in expectation of selling its product to millions of fans. The company’s partnership with FIFA started at the 1986 tournament and they are in negotiations for renewing their deal for the next World Cup in North America.

    When Qatar launched its bid to host the World Cup, the country agreed to FIFA’s requirements of selling alcohol in stadiums, and again when signing contracts after winning the vote in 2010.

    At the 2014 World Cup in Brazil, the host country was forced to change a law to allow alcohol sales in stadiums.

    AB InBev’s deal with FIFA was renewed in 2011 — after Qatar was picked as host — in a two-tournament package through 2022. However, the Belgium-based brewer has faced uncertainty in recent months on the exact details of where it can serve and sell beer in Qatar.

    An agreement was announced in September for beer with alcohol to be sold within the stadium perimeters before and after games. Only alcohol-free Bud Zero would be sold in the stadium concourses for fans to drink in their seats in branded cups.

    Last weekend, AB InBev was left surprised by a new policy insisted on by Qatari organizers to move beer stalls to less visible locations within the perimeter.

    Budweiser was also to be sold in the evenings only at the official FIFA fan zone in downtown Al Bidda Park, where up to 40,000 fans can gather to watch games on giant screens. The price was confirmed as $14 for a beer.

    Ab InBev did not immediately respond to a request for comment.

    The company will be based at an upscale hotel in the West Bay area of Doha with its own branded nightclub for the tournament.

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  • Black Friday surprise: Jeff Bezos tells people NOT to buy cars, refrigerators and other big-ticket items. Critics call him out.

    Black Friday surprise: Jeff Bezos tells people NOT to buy cars, refrigerators and other big-ticket items. Critics call him out.

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    Billionaire Jeff Bezos, who founded the e-retail behemoth Amazon, has some spending tips as Americans gear up for a holiday shopping season — amid four-decade high inflation and recession worries.

    Here’s what he said:

    “‘If you’re an individual and you’re thinking about buying a large-screen TV, maybe slow that down, keep that cash, see what happens. Same thing with a refrigerator, a new car, whatever. Just take some risk off the table.’”

    Bezos made the comments in a CNN
    WBD,
    +0.46%
    interview that aired this week, the same interview where he pledged to give away most of his fortune in his lifetime.

    Why did Bezos offer the tip for consumers and small business to go easy on big-ticket items? He gave one big reason.

    “If we’re not in a recession right now, we’re likely to be in one very soon,” he said in the interview, picking up on his cautionary tweet last month that “the probabilities in this economy tell you to batten down the hatches.”

    Bezos is currently executive chair at Amazon
    AMZN,
    -2.34%    ,
    transitioning to the role last year as Andy Jassy took the reins as CEO.

    Later this week, Amazon confirmed it was laying off some of its staff in its device and services business — joining a growing list of tech companies, including Facebook parent Meta
    META,
    -1.57%
    — that is laying people off. Amazon’s job cuts could number around 10,000, according to the Wall Street Journal.

    “Critics have taken aim at these words of thrift coming from a man — now worth approximately $120 billion — who built Amazon into the online shopping bonanza.”

    To be sure, Bezos is not alone is his worries about a potential recession as the Federal Reserve and other central banks fight higher costs by hiking interest rates.

    But his advice prompted some guffaws on social media. In a nutshell, critics say these are words of thrift coming from a man — now worth approximately $120 billion — who built Amazon into the online shopping bonanza that lets consumers seamlessly spend money.

    As Joshua Becker, a proponent of minimalism wrote on Twitter: “I didn’t hear him mention refraining from Amazon’s Prime Day deals or Black Friday offers, but I recommend adding those items to your list as well.”

    Regardless of how anyone feels about hearing spending advice, particularly from one of the world’s richest people, there are some things to consider as events like Black Friday and Cyber Monday approach.

    For one thing, maybe there are discretionary expenses where people can cut back. Many Americans are still spending briskly, as Walmart
    WMT,
    -0.34%
    third-quarter earnings and October’s retail-sales numbers recently affirmed. Holiday-spending projections paint the same picture.

    Americans will spend between $942.6 billion and $960.4 billion on holiday-season sales this year, according to projections from the National Retail Federation. Last year’s holiday sales totaled $889.3 billion, the trade association said.

    “During the third quarter, Americans’ credit-card balances climbed to $930 billion, the biggest annual increase in more than 20 years, according to the National Retail Federation.”

    But Americans are planning for the holidays while credit-card balances are increasing — likely because credit cards are helping them keep up with rising costs.

    During the third quarter, Americans’ credit-card balances climbed to $930 billion, the biggest annual increase in more than 20 years, according to Federal Reserve Bank of New York data.

    While balances grow, so do credit-card interest rates. The annual percentage rate (APR) on new credit-card offers averaged 19.14% in mid-November, according to Bankrate.com. That beats the old record on APRs for new cards, set at 19% three decades ago.

    The holiday shopping season is typically when Americans accumulate credit-card debt, pay the debts in the early part of the coming year and repeat the holiday-season debt the following year.

    This year, the stakes could be higher if high credit-card bills arrive and a recession-induced job loss follows.

    “It’s not the time to overspend and have a problem with paying your bills later,” Michele Raneri, vice president of financial services research and consulting at TransUnion
    TRU,
    -4.94%    ,
    one of the country’s three major credit bureaus, previously told MarketWatch. “We know the economy is sending mixed messages.”

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  • Starbucks says higher prices, customizable beverages will carry it through potential economic winter

    Starbucks says higher prices, customizable beverages will carry it through potential economic winter

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    Ever since Starbucks Corp. rolled out longer-term financial targets in September, Wall Street has wondered how the coffee chain might meet what analysts say were ambitious goals, as rising prices drain consumer spending. For at least the year ahead, executives on Thursday called out three ways to get there: higher prices, younger customers and cold, customizable beverages.

    For the fiscal year ahead, executives for the coffee chain on Thursday said they expected global same-store sales to be “near the high end” of its long-term target of between 7% to 9% growth. FactSet expects growth of 8.6%.

    When an analyst asked what gave management confidence in that target, interim Chief Executive Howard Schultz said that its coffee was an “affordable luxury,” and that it was armed with a loyalty program that it didn’t have in years past. And they said its customers were getting younger, not older.

    “Not only has it gotten younger, but that young, Gen Z customer tends to have significantly more discretionary money at their disposal,” he said. “And their loyalty to Starbucks has been quite significant and predicted.”

    He said Starbucks
    SBUX,
    +0.12%
    had raised prices by nearly 6% over the past 12 months and hadn’t seen demand subside. And he said cold coffee beverages made up 76% percent of total drink sales in its U.S. company-owned stores. In the fourth quarter, more than half of beverages overall in those stores were customized, leading to $1 billion in sales a year for add-on syrups, foams and other ingredients.

    “I think customization, which we spoke a lot about in our prepared remarks, is obviously giving us the ticket is becoming more accretive,” he said.

    Management said they expect U.S. same-store sales growth of 7% to 9% for the year ahead. For China, they’re banking on “outsize” growth for the metric — interrupted by a decrease in the first-quarter — as the nation potentially emerges from pandemic-related lockdowns.

    For overall revenue, they expect gains of between 10% and 12%. Management also said they would resume their buyback program in fiscal 2023.

    Even as the Federal Reserve tries to chart a path to lower prices, Starbucks is the latest company to say it still has “pricing power,” or the ability to charge customers more. Snack maker Mondelez International
    MDLZ,
    -0.93%    ,
    earlier in the week, said it planned to raise prices through next year. Similarly, its own chief executive also described its snacks as an “affordable indulgence.”

    Prior to the call, Starbucks reported fiscal fourth-quarter results that beat expectations, helped by a boost in U.S. sales and higher prices.

    The coffee chain reported net income of $878 million, or 76 cents a share, compared with $1.76 billion, or $1.49 a share, in the same quarter last year. Revenue rose 3% to $8.4 billion, compared with $8.15 billion in the prior-year quarter.

    Same-store sales rose 7% worldwide, helped largely by bigger ticket sizes, even as actual transaction volume remained muted. They were up 11% in the U.S. But international same-store sales fell 5%, with a 16% drop in China.

    Excluding restructuring, impairment and other costs, Starbucks earned 81 cents per share, compared with 99 cents a year earlier. U.S. members of its loyalty program who were active for three months rose 16% to 28.7 million.

    Analysts polled by FactSet expected Starbucks to report adjusted earnings per share of 72 cents, on revenue of $8.323 billion. Same-store sales were expected to rise 4.2%.

    Shares rose 2.4% after hours.

    As with other restaurants and retailers, Starbucks’ sales this year have been helped by price increases. Analysts have also said higher-income consumers, who might not mind higher prices as much, as well as demand for cold beverages, have propelled demand. While China’s COVID-19 restrictions have weighed on sales, analysts say demand trends are strong elsewhere.

    “The U.S. business is humming, and the China risk is increasingly understood,” Wedbush analyst Nick Setyan wrote in a research note ahead of Starbucks’ earnings.

    The earnings report comes as Starbucks battles a nascent unionization push at some of its stores. Some bargaining efforts between the company and the union members have stalled, amid allegations from both of bad-faith negotiations. The company over the past year has spent more to raise employee pay and rolled out other incentives at non-union stores.

    Starbucks stock has tumbled 27% so far this year. The S&P 500 Index
    SPX,
    -1.06%    ,
    by comparison, is down around 22%.

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  • How the Federal Reserve’s rate hike impacts your holiday spending plans: ‘It’s not the time to overspend’

    How the Federal Reserve’s rate hike impacts your holiday spending plans: ‘It’s not the time to overspend’

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    It is three weeks before Black Friday, but the Federal Reserve is about to make the post-holiday debt hangover a little more intense.

    By the time the latest rate hikes filter through the very rate-sensitive credit card industry and pump up customers’ annual percentage rates a little more, experts say it will be some point in December 2022 or January 2023. Right in time for many holiday gifts and expenses to post on credit cards bills — and there to make the costs of a carried balance a little extra expensive.

    Every year, many people accumulate credit card debt through the holiday season, pay it off in the early part of the following year and then repeat the process.

    What’s different now is the presence of four-decade high inflation, coupled with fast-rising interest rates that the Fed hopes will ultimately cool those rising prices, although without sending the economy to a recessionary thud.

    Wednesday’s rate move is the fourth straight 75-basis-point rate hike to the federal funds rate, taking it to the 3.75% -4% range, when it was near zero last year’s holiday season. By now, Americans are all too acquainted with 2022’s fast-rising interest rates. They just haven’t gone through a Christmas and Hanakkuh with it yet.

    “It’s not the time to overspend and have a problem with paying your bills later. We know the economy is sending mixed messages,” said Michele Raneri, vice president of financial services research and consulting at TransUnion
    TRU,
    -4.31%    ,
    one of the country’s three major credit reporting companies.

    It’s extra important to think through a holiday budget and how much relies on credit, she said. “People need to think about how much they can afford to repay and how long it will take to repay it.”

    Holiday spending could be the same as 2021 for many people — but not everyone

    Last month, third-quarter earnings from major banks like JPMorgan Chase & Co.
    JPM,
    -0.92%    ,
    Wells Fargo
    WFC,
    -0.15%    ,
    Citibank
    C,
    -1.45%
    and Bank of America
    BAC,
    -0.30%
    indicated consumer finances, on the whole, are not yet showing cracks under inflation’s strains. (Other numbers show the strain, like the personal savings rate that’s been dwindling.)

    Now, two forecasts suggest many people ready to spend the same amount for this year’s holiday cheer as they did last year.

    People are planning to spend an average $1,430 on gifts, travel and entertainment this year, which is around the $1,447 spent last year, according to PwC researchers. Three-quarters of people said they were planning to spend the same or more than last year and respondents said credit cards were one of their top ways to pay.

    “ Compared to last year, credit card balances are getting bigger, more people are sitting on balances and debt costs are getting pricier.”

    By another measure, Americans will pay an average $1,455 on holiday-related gifts and experiences, essentially flat from last year, say Deloitte researchers.

    More than one-third of surveyed consumers say their financial outlook is worse than the same point last year. Nearly one-quarter of people were concerned about credit card debt as of late September, Deloitte’s numbers show in an ongoing tracking of consumer mood.

    It’s understandable to see the concern with households amassing a collective $890 billion in credit card debt through the second quarter. Compared to last year, balances are getting bigger, more people are sitting on balances and debt costs are getting pricier because the interest rates applied to those balances are rising.

    When people were carrying a credit card balance month to month, the sum was $5,474 on average, according to Raneri. That’s through the end of September and it’s a nearly 13% rise year over year, she said. The 164 million people carrying a balance is a 5% increase from last year, she noted.

    Credit cards carrying a balance during the third quarter had an average 18.43% APR, Federal Reserve data shows. That’s up from 16.65% in the second quarter and up from 17.13% in 2021’s third quarter.

    How the Fed influences credit card rates

    Credit card issuers typically determine their rates by applying a “prime rate” — typically three percentage points on top of the federal funds rate — and the issuer’s profit margin, said Ted Rossman, senior industry analyst at Bankrate.com.

    By late October, the rate on new card offers was 18.73%, according to Bankrate data. At this point last year, it was 16.31%, Rossman said. In a few weeks, the rates on new offers should beat the all-time record of an average 19% APR, exclusive to new offers, he added.

    While it can take a billing cycle or two for a higher APR to make its way to an existing credit card account, Rossman noted the APRs on new offers could rise in a matter of days.

    Here’s a hypothetical to show how much more expensive credit card debt becomes with every extra hike. Suppose the $5,474 balance is on a credit card with the current 18.73% average. If a person has to resort to minimum payments, Rossman said, they’d be paying $7,118 just in interest to pay off the debt.

    “ In a few weeks, the rates on new credit card offers should beat the all-time record of an average 19% APR.”

    What if the 18.73% APR gets kicked up 75 basis points to 19.48%? If that same borrower has to pay minimums, they are now paying $7,417 in interest to snuff the principal debt of $5,474, Rossman said.

    The example has its limits because people may pay more than the minimum and they may incur more credit card debt as they pay off the old one. But it shows a bigger point: “Unfortunately, anybody dealing with credit card debt is a loser from the series of rate hikes. It was already expensive. It’s getting more so,” Rossman said.

    When do rate hikes stop?

    While decisions during the Fed’s November meeting can have a ripple effect on holiday-time borrowing costs, observers say the real question about Wednesday is the clues Federal Reserve Chairman Jerome Powell drops for what’s next. The central bank’s committee voting on interest rate increases reconvenes in mid-December.

    On Wednesday, the Fed said in a statement it expected further rate increases, but also said it would be watching to see if there were lag effects with its tightening policies, which could slow or limit the total amount of increases.

    “People, when they hear lags, they think about a pause. It’s very premature, in my view, to think about or be talking about pausing our rate hike. We have a ways to  go,” Powell told reporters at a Wednesday afternoon press conference.

    The economy is strong enough to handle higher rates, Powell said. For one thing, households have “strong balance sheets” and “strong spending power,” he noted.

    Stock markets first jumped higher after the latest interest rate announcement. But they gave up the gains — and then some — by the end of the day. The Dow Jones Industrial Average
    DJIA,
    -1.55%
    was down more than 500 points, or 1.6% while the S&P 500
    SPX,
    -2.50%
    was down 2.5% and the Nasdaq Composite
    COMP,
    -3.36%
    closed 3.4% lower.

    Top economists in major North American-based banks forecasted the Fed will keep raising interest rates “until the first quarter of next year before potentially lowering rates through the end of 2023,” Sayee Srinivasan, chief economist at the American Bankers Association, the banking sector’s trade association, said ahead of Wednesday’s latest rate hike.

    “Top economists polled as part of a banking industry panel expect Fed rate increases through at least the first quarter of 2023.”

    The forecast, coming through an ABA advisory committee, is no sure thing. “Everything depends on the ability of the Fed to bring inflation down, so that will remain their clear priority,” said Srinivasan.

    Meanwhile, rising costs may cause more people to put the holiday cheer on plastic, even their decorations. The majority of Christmas tree growers in one poll are expecting wholesale prices to climb 5% to 15% for this season.

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  • 20 dividend stocks that may be safest if the Federal Reserve causes a recession

    20 dividend stocks that may be safest if the Federal Reserve causes a recession

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    Investors cheered when a report last week showed the economy expanded in the third quarter after back-to-back contractions.

    But it’s too early to get excited, because the Federal Reserve hasn’t given any sign yet that it is about to stop raising interest rates at the fastest pace in decades.

    Below is a list of dividend stocks that have had low price volatility over the past 12 months, culled from three large exchange traded funds that screen for high yields and quality in different ways.

    In a year when the S&P 500
    SPX,
    -0.40%
    is down 18%, the three ETFs have widely outperformed, with the best of the group falling only 1%.

    Read: GDP looked great for the U.S. economy, but it really wasn’t

    That said, last week was a very good one for U.S. stocks, with the S&P 500 returning 4% and the Dow Jones Industrial Average
    DJIA,
    -0.32%
    having its best October ever.

    This week, investors’ eyes turn back to the Federal Reserve. Following a two-day policy meeting, the Federal Open Market Committee is expected to make its fourth consecutive increase of 0.75% to the federal funds rate on Wednesday.

    The inverted yield curve, with yields on two-year U.S. Treasury notes
    TMUBMUSD02Y,
    4.540%
    exceeding yields on 10-year notes
    TMUBMUSD10Y,
    4.064%    ,
    indicates investors in the bond market expect a recession. Meanwhile, this has been a difficult earnings season for many companies and analysts have reacted by lowering their earnings estimates.

    The weighted rolling consensus 12-month earning estimate for the S&P 500, based on estimates of analysts polled by FactSet, has declined 2% over the past month to $230.60. In a healthy economy, investors expect this number to rise every quarter, at least slightly.

    Low-volatility stocks are working in 2022

    Take a look at this chart, showing year-to-date total returns for the three ETFs against the S&P 500 through October:


    FactSet

    The three dividend-stock ETFs take different approaches:

    • The $40.6 billion Schwab U.S. Dividend Equity ETF
      SCHD,
      +0.15%
      tracks the Dow Jones U.S. Dividend 100 Indexed quarterly. This approach incorporates 10-year screens for cash flow, debt, return on equity and dividend growth for quality and safety. It excludes real estate investment trusts (REITs). The ETF’s 30-day SEC yield was 3.79% as of Sept. 30.

    • The iShares Select Dividend ETF
      DVY,
      +0.45%
      has $21.7 billion in assets. It tracks the Dow Jones U.S. Select Dividend Index, which is weighted by dividend yield and “skews toward smaller firms paying consistent dividends,” according to FactSet. It holds about 100 stocks, includes REITs and looks back five years for dividend growth and payout ratios. The ETF’s 30-day yield was 4.07% as of Sept. 30.

    • The SPDR Portfolio S&P 500 High Dividend ETF
      SPYD,
      +0.60%
      has $7.8 billion in assets and holds 80 stocks, taking an equal-weighted approach to investing in the top-yielding stocks among the S&P 500. It’s 30-day yield was 4.07% as of Sept. 30.

    All three ETFs have fared well this year relative to the S&P 500. The funds’ beta — a measure of price volatility against that of the S&P 500 (in this case) — have ranged this year from 0.75 to 0.76, according to FactSet. A beta of 1 would indicate volatility matching that of the index, while a beta above 1 would indicate higher volatility.

    Now look at this five-year total return chart showing the three ETFs against the S&P 500 over the past five years:


    FactSet

    The Schwab U.S. Dividend Equity ETF ranks highest for five-year total return with dividends reinvested — it is the only one of the three to beat the index for this period.

    Screening for the least volatile dividend stocks

    Together, the three ETFs hold 194 stocks. Here are the 20 with the lowest 12-month beta. The list is sorted by beta, ascending, and dividend yields range from 2.45% to 8.13%:

    Company

    		 Ticker

    		 12-month beta

    		 Dividend yield

    		 2022 total return
    Newmont Corp.

    		 NEM,
    -0.78%         		0.17

    		 5.20%

    		 -30%
    Verizon Communications Inc.

    		 VZ,
    -0.07%         		0.22

    		 6.98%

    		 -24%
    General Mills Inc.

    		 GIS,
    -1.47%         		0.27

    		 2.65%

    		 25%
    Kellogg Co.

    		 K,
    -0.93%         		0.27

    		 3.07%

    		 22%
    Merck & Co. Inc.

    		 MRK,
    -1.73%         		0.29

    		 2.73%

    		 35%
    Kraft Heinz Co.

    		 KHC,
    -0.56%         		0.35

    		 4.16%

    		 11%
    City Holding Co.

    		 CHCO,
    -1.45%         		0.38

    		 2.58%

    		 27%
    CVB Financial Corp.

    		 CVBF,
    -1.24%         		0.38

    		 2.79%

    		 37%
    First Horizon Corp.

    		 FHN,
    -0.18%         		0.39

    		 2.45%

    		 53%
    Avista Corp.

    		 AVA,
    -7.82%         		0.41

    		 4.29%

    		 0%
    NorthWestern Corp.

    		 NWE,
    -0.21%         		0.42

    		 4.77%

    		 -4%
    Altria Group Inc

    		 MO,
    -0.18%         		0.43

    		 8.13%

    		 4%
    Northwest Bancshares Inc.

    		 NWBI,
    +0.10%         		0.45

    		 5.31%

    		 11%
    AT&T Inc.

    		 T,
    +0.63%         		0.47

    		 6.09%

    		 5%
    Flowers Foods Inc.

    		 FLO,
    -0.44%         		0.48

    		 3.07%

    		 7%
    Mercury General Corp.

    		 MCY,
    +0.07%         		0.48

    		 4.38%

    		 -43%
    Conagra Brands Inc.

    		 CAG,
    -0.82%         		0.48

    		 3.60%

    		 10%
    Amgen Inc.

    		 AMGN,
    +0.41%         		0.49

    		 2.87%

    		 23%
    Safety Insurance Group Inc.

    		 SAFT,
    -1.70%         		0.49

    		 4.14%

    		 5%
    Tyson Foods Inc. Class A

    		 TSN,
    -0.40%         		0.50

    		 2.69%

    		 -20%
    Source: FactSet

    Any list of stocks will have its dogs, but 16 of these 20 have outperformed the S&P 500 so far in 2022, and 14 have had positive total returns.

    You can click on the tickers for more about each company. Click here for Tomi Kilgore’s detailed guide to the wealth of information available free on the MarketWatch quote page.

    Don’t miss: Municipal bond yields are attractive now — here’s how to figure out if they are right for you

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  • Consumers pay 14.1% more on average for pumpkin-spice products

    Consumers pay 14.1% more on average for pumpkin-spice products

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    We may be paying a price for our pumpkin-spice cravings.

    A new study from the MagnifyMoney.com website has found that retailers routinely charge more for pumpkin-spice items than for the standard versions of those same products — in fact, a lot more. On average, the pumpkin-spice “tax,” as MagnifyMoney.com dubs it, is 14.1%.

    That’s a significant increase from 2020, which was the last time MagnifyMoney looked at the pumpkin-spice pricing differential. At that time, the “tax” was 8.8%.

    “I think companies are finding it’s a great way to capitalize on a seasonal trend,” said Ismat Mangla, executive editor of MagnifyMoney.com. “As long as consumers are willing to pay for it, they can take advantage of it.” MagnifyMoney.com, which is owned by LendingTree, offers information on how to manage and grow your money.

    Craig Agranoff, a Florida-based marketing expert, put it this way: “It’s Retailing 101.”

    Some retailers really push the pumpkin-spice upcharge to the upper limits, the 2022 study noted. A case in point: Trader Joe’s, the supermarket chain beloved for its low prices, charges 161.1% more for its Pumpkin Spiced Teeny Tiny Pretzels than for its Honey Wheat Pretzel Sticks. The retailer also charges 49.9% more for its Pumpkin Spice Hummus than for its Mediterranean Style Hummus.

    And what about Starbucks
    SBUX,
    -1.60%    ,
    the coffee chain that made pumpkin spice a household favorite? The study found that it levies an 18.3% “tax” on its ever-popular Pumpkin Spice Latte (or PSL), with a standard 16-ounce latte running $5.45 and the PSL costing $6.45.

    Trader Joe’s and Starbucks didn’t respond to a MarketWatch request for comment.

    Agranoff said consumers are probably willing to pay more for pumpkin-spice products without complaining because the products are not considered essentials. By contrast, consumers tend to be very sensitive when it comes to price increases on items they need to buy on a regular basis, such as milk or gasoline.

    Still, not every retailer is asking consumers to shell out more for pumpkin-spice products. Target
    TGT,
    -1.28%
    charged less for several items versus the standard ones, the MagnifyMoney.com study found. One example: A bag of Pepperidge Farm Milano pumpkin-spice cookies was 14.3% cheaper than the traditional Milano cookies at Target.

    Regardless of whether the price is higher or lower, Mangla of MagnifyMoney.com isn’t one to buy these products. “Personally, I’m over pumpkin spice,” she said.

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  • Halloween spending expected to increase by $500 million — as candy prices soar at the highest rate on record

    Halloween spending expected to increase by $500 million — as candy prices soar at the highest rate on record

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    It’s going to be a big year for Halloween, despite millions of Americans feeling under financial pressure due to inflation.

    Total spending is expected to hit $10.6 billion, an increase of 5% or $500 million on last year, the National Retail Federation estimates. That’s up $2 billion or 20% on the $8.8 billion Halloween expenditure in 2019 before the COVID-19 pandemic. 

    Spending on costumes expect to reach $3.6 billion this year, the NRF survey finds, the highest since 2017. Adult costume spending could reach $1.7 billion this year, $200 million more than last year.

    More than half (57%) of Americans said that inflation did impact their Halloween spending, according to a separate LendingTree Halloween spending survey. In fact, nearly a quarter of this group said they were buying less candy.

    Inflation was 8.2% in September compared to last year, according to Bureau of Labor Statistics data. It was among the highest level in the past four decades.

    Candy and chewing gum rose 13.1% year-on-year in September, the highest increase on record, the BLS said. To put that in context: Candy and chewing gum increased 13% from December 1997 to December 2006.

    “Candy and chewing gum rose 13.1% year-on-year in September, the highest increase on record.”

    For those who haven’t started, the competition was already on. In July, Home Depot
    HD,
    +2.13%
    announced that its popular 12-foot skeleton was sold out, three months before the celebration. 

    A Home Depot spokesperson confirmed the initial sellout of the skeleton in summer, and said the company has been releasing more of these items periodically since then.

    Supply-chain disruptions could also complicate the competition. During Hershey’s
    HSY,
    +0.57%
    second-quarter earnings call in July, Chief Executive Officer Michele Buck said the candy manufacturer had to prioritize the everyday candy packaging over the Halloween ones. She said that decision was “critical to enable us to increase advertising and merchandising levels.”

    In an email to MarketWatch, however, a Hershey’s spokesperson said this decision was not a sign of shortage, adding that the brand had produced more candies for the season than they had in previous years, as Halloween demand remains high. 

    “Like every season over the past few years, sell-through at retail remains high with people purchasing candy, décor and other seasonal items earlier and more often. As a result, seasonally packaged candy may be more limited on the shelf as we get to the final week of the season. Fortunately, the same great brands in snack sizes are available to help fill trick-or-treat bags and buckets,” she said.  

    “On average, Americans plan to spend between $100 and $169 on Halloween candy, décor, cards and costumes.”

    On average, Americans plan to spend $100 on average for Halloween candy, décor, cards and costumes, the National Retail Federation said. LendingTree estimates that households will spend $169 this year, with six-figure salary earners and parents with young children planning to spend the most — $340 and $309 respectively.

    More than a third of the consumers surveyed admit they plan to spend more than they can afford this year. Generation Z — those aged 18 to 24 — and parents with younger children are the most likely to admit to overspending.

    “With the worst of the pandemic further in the rearview mirror, people are excited to get back to spending on the things they love most —, particularly the things they maybe couldn’t fully enjoy over the last few years,” LendingTree chief credit analyst Matt Schulz said.

    The most common reason for overspending: 44% of respondents said they spent more than they had expected, while 34% said they were making their children happy.

    The NRF concluded that 40% of people are shopping at discount stores this Halloween, 36% at specialty Halloween costume stores, and 31% online. Another 11% said they will shop at thrift stores and resale shops.

    “Social media is playing an increasingly important role in consumer behavior, and Halloween is no different,” Phil Rist, executive vice-president of strategy at Prosper Insights & Analytics, said. “Younger consumers, particularly those under the age of 25, will look to platforms like Instagram and TikTok for costume inspiration this year.”

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  • Texas Pete maker sued for crafting its hot sauce in — gasp — North Carolina

    Texas Pete maker sued for crafting its hot sauce in — gasp — North Carolina

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    Some Texas Pete customers are hot under the collar about where this sauce is actually cooked up. 

    A California man has filed a class action suit against the hot sauce maker, claiming it “capitalizes on consumers’ desire to partake in the culture and authentic cuisine of one of the most prideful states in America” with a name and label that plays up Texas — yet, the product is actually whipped up in Winston-Salem, N.C.

    Hey, at least it wasn’t made in New York City!

    The complaint filed by the Clarkson Law Firm on behalf of customer Philip White says that the dissatisfied customer bought a bottle of Texas Pete for about $3 at a Ralph’s Supermarket in September 2021, because he believed it was made in Texas. The suit claims that White would have passed over the bottle of Texas Pete if he knew it really came from North Carolina.

    But with a name like Texas Pete, as well as a label featuring “distinct Texan imagery” like the “lone star” from the Texas flag and a cowboy, the suit says that consumers like White looking for an authentic Texas hot sauce are being misled. 

    “Because there is nothing ’Texas’ about Texas Pete, [the company’s] deceptive marketing and labeling scheme violates well-established federal and state consumer protection laws aimed at preventing this exact type of fraudulent scheme,” the suit states. 

    Garner Foods told MarketWatch in a statement over email that, “We are aware of the current lawsuit that has been filed against our company regarding the Texas Pete brand name.  We are currently investigating these assertions with our legal counsel to find the clearest and most effective way to respond.”

    It should be noted that both the Texas Pete and T.W. Garner Food Co. websites point out that the hot sauce is made in North Carolina. What’s more, the back label on the hot sauce bottle also reveals that it is made in the Tar Heel State. 

    But the suit argues that “consumers do not view the back label of the products when purchasing everyday food items such as hot sauce.” The plaintiffs are asking for unspecified damages, as well as for Texas Pete to change its label and advertising practices. 

    This brings to mind an Illinois woman’s $5 million suit against Kellogg last year, claiming the company is misleading consumers by selling “Frosted Strawberry Pop-Tarts” that barely contain any strawberries. 

    Or when Starbucks faced backlash several years ago as more consumers started realizing their beloved pumpkin spice lattes didn’t actually contain any pumpkin. The coffee chain has since tweaked the recipe to squeeze in autumn’s signature gourd.

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  • Midterm elections: Republicans regain edge over Democrats in generic ballot, scoring biggest advantage in 2 months in key indicator

    Midterm elections: Republicans regain edge over Democrats in generic ballot, scoring biggest advantage in 2 months in key indicator

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    The Republican Party has an edge again in the generic ballot, and that advantage has reached a level last seen in late July, according to a RealClearPolitics average for that closely watched indicator.

    That could be another sign that the GOP may be getting back some momentum as November’s midterm elections approach, after Democratic prospects improved during the summer.

    Republicans are now scoring 46.0% support in the RCP average of generic ballots, a percentage point ahead of Democrats at 45.0%.

    The GOP hit a 1-point edge last Wednesday, then saw a dip, but as of Tuesday was back at that level, as shown in the chart below.

    It’s not a big advantage, but it’s the best showing for Republicans in RCP’s data for generic ballots since July 28, as Democrats had the advantage for much of August and September.

    Related: If this seat flips red, Republicans will have ‘probably won a relatively comfortable House majority’

    Also read: ‘Republican control of the House is not a foregone conclusion,’ says political analyst


    RealClearPolitics

    The generic ballot refers to a poll question that asks voters which party they would support in a congressional election without naming individual candidates. Analysts tend to see it as a useful indicator.

    Other websites focused on political analysis and forecasting, such as FiveThirtyEight, still show Democrats with an edge in their data for generic ballots.

    Election Day for the midterm contests is now five weeks away. Democrats have focused their campaigns on abortion rights after the Supreme Court’s June decision that overturned Roe v. Wade, while Republicans have seized on Americans’ frustration with high inflation.

    The additional chart below is interactive and shows RCP’s data for the generic ballot over a longer time frame.

    Related: Biden to talk up Democrats’ support for abortion rights, with midterm elections now just 5 weeks away

    And see: New poll finds just 30% of Americans approve of how Biden is handling inflation

    Plus: Republicans’ chances for taking control of Senate rebound to 46%, a level last seen about 8 weeks ago

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