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Today in the Market (12/21/2022)

Good Evening. Wednesday’s rally in U.S. equities was fueled by solid results from Nike and FedEx, as well as optimistic consumer confidence data, which boosted mood after a previous round of selling.

The S&P 500 increased by 1.49%, while the Dow Jones also increased by 1.60%. The Nasdaq Composite also increased by 1.54%.

REDUCTION IN INVENTORY

Better-than-anticipated sales and profits allayed fears that Nike (NKE) would be harmed by a slow global economic environment, sending the stock up 12% Wednesday.

  • Earnings Per Share: $0.85 vs. $0.65 expected
  • Revenue: $13.32 Billion vs. $12.6 Billion expected

The main highlight of Nike’s fiscal second quarter, however, was the company’s reduction of its excess inventory. This was prompted by the economic downturn earlier this year. This problem has hampered profit margins (due to Nike aggressively liquidating merchandise).

Going forward… management informed investors that it continues to prioritize inventory clearance, notably via off-price retail outlets. In 2023, more growth is anticipated, including a more prudent approach to purchasing new inventory.

GOVERNMENT CHRISTMAS LIST

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Legislators have until the end of the week to pass a bill that will keep the Christmas lights on through December 24. Yesterday, they made significant headway by releasing a $1.7 trillion omnibus funding bill to support government agencies through September 2023.

The measure must pass both houses of Congress by the end of the week when the current budget expires. Republicans say they would back a stopgap plan to prevent a partial government shutdown if the bill fails to pass the Senate by tomorrow.

Big picture… Legislators from both political parties declare victory. Democrats are highlighting budget increases for veterans and energy cost assistance for low-income families as victories. In the meantime, Republicans are satisfied with their accomplishments so far in reducing non-defense expenditures.

Where will the money go?

How much?

Military

$858 Billion

Domestic Spending Ex (Veterans)

$772 Billion

Veteran Healthcare

$119 Billion

Ukraine Aid

$45 Billion

Storm & Wildfire Relief

$40 Billion

Low-Income Heating Aid

$5 Billion

Puerto Rico's Energy Grid

$1 Billion

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