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Bargain hunting in the winter of discontent

A few years back, ‘Black Friday’ and ‘Cyber Monday’ were exotic customs of the US consumer frenzy. Actually, at the time, you had to explain what the terms meant. Otherwise, you were not understood outside of the US.

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Key take-aways

  • Renewed contingency measures are weighing on sentiment rather than the economy. Europe is the most affected for now but is a mixed bag anyway. Selection is key here.
  • Like everyone else, investors have a hard time ignoring the holiday shopping hype. The same holds true for the metaverse hype.

As with many things about the American way of life, after some time, the rest of the world is completely overwhelmed by its traditions. This can be seen by the relentless bombardments of advertising that we get these days about bargains, bargains, bargains. There is no way to avoid them. Where have all the shortages gone? Where are the containers full of goods stuck at the shipping terminals? Where is the winter of discontent that will end in ‘a lot of vouchers to be given this Christmas’, as one expert put it? Looking at the recent flurry of ads, it feels more like abundance. But let us see how the pundits will create an inflation narrative out of the shopping season. For the time being, the projections predict another record weekend this year (see number of the week), and this is unlikely to be due to price hikes only but rather rebates as well.

[Translate to Traditional Chinese:] Head of Research Christian Gattiker recommends creating a strategy to "put excess cash to work"

Regional differentation
Taking a look at Europe, the picture gets somewhat bleaker, as the recent surge in infections is triggering renewed contingency measures. Running the economic numbers leaves us with a clear verdict: this is hampering sentiment more than the economy. The fallout may be as immaterial as being lost in noise, but, in recent years, Europe has been a mixed bag all the way. Therefore, we have introduced a regional differentiation, as selection is key in such markets.

In conclusion
What Thanksgiving is to shoppers, metaverse is to technology geeks, or maybe the geeks are a lot more sober about it than investors in the space. Our Next Generation analysts are flagging a hype here, for, when looking at valuations, some of the smaller names are in absolute supersonic spheres.

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