Hungry for deals

Target’s checking out. The retailer said it would no longer accept personal checks after seeing an “extremely low volume” of folks whipping out their pens. Unfortunately, that was one of the last places we could show off our majestic sea-turtle checkbooks.

Friday the 13th wasn’t bad luck for markets: the S&P 500 and Nasdaq clinched their best week of the year as traders upped bets that the Fed would do a jumbo rate cut on Wednesday.

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Chicken nuggies… taste better when they’re discounted. McDonald’s last week whetted appetites with news that it would extend its $5 meal deal into December. It’s expected that 80% of its 13.5K US locations would keep slinging the promo (burger, fries, nuggets, drink), which McD’s intro’d in June to lure back cost-conscious consumers. FYI: McDonald’s second-quarter sales fell for the first time in three years as folks dialed back their burger bites. McD’s wasn’t alone in its soggy performance:

Deal or no deal… It’s not just fast food that’s serving up discounts. Retailers including Target, Walmart, and Walgreens have cut prices on thousands of staples like milk, diapers, pet food, and snacks to drum up demand. Earlier this month, Kroger’s CEO promised $1B in price cuts if its planned merger with Albertsons went through. The discounting push from America’s biggest chains may have helped price growth cool across the board: in August, annual inflation dropped to its lowest level since early 2021. And from July to August, online grocery prices fell by the most in a decade, while the cost of staples like bacon, bananas, and bread dipped.

Discounting can have a domino effect… Consumers stomached price hikes for years during the pandemic, but the vibe shifted as “greedflation” entered the nation’s vocab. Once America’s largest retailers like Walmart started price slashing, it made it difficult for other national chains not to follow suit. Now, fast foodies are playing catch-up. The discount domino may be having an effect: consumer sentiment popped last month for the first time in five months. 

Pow brings out the scissors?… Traders are betting that the Fed will trim rates on Wednesday for the first time since March 2020 (ICYMI: rates are at a two-decade high). This month, fresh data boosted bets that the Fed’s cut will be more of a snip than a slash (25 basis points versus 50). The jobs report showed that hiring’s slowing, but not in a way that’s particularly concerning. And the consumer-prices report confirmed inflation’s cooling, but is staying sticky in some areas. Still, on Friday, traders upped bets on a double cut, giving it a 45% chance. 

Waiting for lower mortgage rates like… Lennar, one of America’s biggest home builders, is set to host its earning call on Thursday. In the spring quarter, Lennar nailed an earnings beat after its incentives to buyers helped build up demand: Lennar’s home deliveries and orders both saw double-digit growth, but its average sale price fell 5% (to $426K — still ain’t cheap). Lennar said that high rates and prices have weighed on demand. But Goldman estimated that home prices will climb when the Fed starts cutting rates. 

The AiPhones are coming… Apple’s AI-infused iPhone 16s hit shelves this week as the tech titian turns to AI to fuel upgrades. Apple’s sales fell for five of the past six quarters as demand dipped for phones (which, btw, make up nearly half its revenue). Apple’s first phone designed for genAI has features like AI rewrites, a smarter Siri, and a Google Lens-style search function. While most folks say they don’t buy iPhones for new features (the top reason: their old phone’s outdated), experts forecast the AI lineup could generate record holiday sales for Apple. 

Staying in their lane… Kroger and Albertsons are still trying their best to merge (they’ve spent $1B+ on the effort so far), arguing that they need to combine to compete with Walmart, Amazon, and Costco. But regional grocers like H-E-B in Texas are doing just fine by focusing on existing territory. H-E-B, the US’s fifth-largest private co, is beloved by Texans (it sells $1M of brisket queso dip every week). That loyalty helps local grocers fend off larger rivals: when Walmart expanded into the Lone Star State a decade ago, H-E-B kept its market share.

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28 NFL quarterbacks are earning at least $10M this season

Authors of this Snacks own shares of Amazon, Apple, Google, Walmart, and Yum Brands

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