We will be giving some macro economic market updates on a weekly basis. No equity recommendations will be given in this commentary, and we encourage you to contact us if you have questions regarding any observations.
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This weeks issue: Credit cards, Credit conditions, Credit card stocks, Visa stock, Mastercard stock, Visa IPO, Nancy and Paul Pelosi buy Visa, Insider trading in Washington, Market consolidation, Earnings versus weighting on the S&P 500, Magnificent seven stocks, Mega cap tech stocks, CEO pay, Highest paid CEOs, Peloton CEO, Nasdaq 100 rotation, Nasdaq 100 re balance, Berkshire Hathaway, Oil stocks, Natural gas stocks, Occidental Petroleum stock, Dominion energy, Russian energy, Russia and EU trade, Oil price pullbacks, Inflation, CPI, Core inflation, Energy prices, Bank of Canada.
Consumer finances continue to break down as interest rates hit multi-year highs. On top of rising interest rates, consumers have had to battle rapidly rising prices in all facets of their lives.
This has led to consumers adding on debt to maintain their status quo which has in turn increased credit card debt and credit card delinquencies. According to the Federal Reserve, 22.2% of credit cards are currently being assessed interest, an all-time high and well above the historical average.
The buy now, pay later mentality seems to be finally catching up to society as it seems fewer and fewer consumers lack budgeting capabilities.
As servicing costs rise for credit card holders, credit card stocks are trading at all-time highs.
It’s no surprise that credit card stocks are trading at all-time highs. Visa recently reported record earnings in the first quarter of 2023, and Mastercard reported record annual earnings in 2022 where earnings per share jumped 17% from 2021. This has occurred while other financial stocks have struggled in 2022 and 2023.