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Record number of unionized workers could walk out Christmas Eve. (0:16) American Airlines briefly grounds all flights. (3:24) Netflix gears up for NFL debut. (4:50) Scrooge & Marley spooks investors. (6:08)
This is an abridged transcript of the podcast.
Our top story so far. Starbucks (NASDAQ:SBUX) may be facing its biggest barista strike ever on Christmas Eve.
The coffee store chain said that over the course of the weekend and on Monday, approximately 60 stores in total were temporarily closed because of the actions called for by the Workers United union.
Workers United said its unfair labor practice strike will hit historic levels Tuesday as hundreds of stores from coast to coast prepare to join the walkouts. The union said that the Strike Before Christmas is projected to be the largest-ever strike at the coffee giant, surpassing the 2023 Red Cup Rebellion, with over 5,000 workers at more than 300 stores nationwide expected to walk off the job on Christmas Eve.
But the company noted that an overwhelming majority of Starbucks stores across the country have opened as planned and are busy. And some of the stores that temporarily closed earlier on the weekend have reopened as partners sought to come back to work.
“The public conversation may lack the important context that the vast majority of our stores (97-99%) will continue to operate and serve customers, and we expect a very limited impact to our overall operations,” it added.
In today’s trading, Santa Claus came to town to kick of the Santa Rally period. Stocks gained ground steadily from the open to the early market close.
The Nasdaq (COMP.IND) led that charge, rising 1.35% and reclaiming the 20,000 market. The S&P (SP500) added 1.1%, finishing back above 6,000. The Dow (DJI) gained 0.9%, ending above 43,000.
As noted on Sunday’s Wall Street Brunch, the Santa Claus Rally was first recorded in 1972 by Wall Street legend Yale Hirsch, the creator of Stock Trader’s Almanac.
“If Santa Claus should fail to call, bears may come to Broad and Wall.”
While Yale passed away in 2021, the Stock Trader’s Almanac is now produced by his son Jeff, who noted the importance of taking the Santa Claus Rally into consideration along with the First Five Days early warning system (how stocks perform in the first five sessions of the year) and the January Barometer (S&P 500 performance in the first month of the year) to know what to expect in 2025.
“When all three are positive, the market is up 90.6% of the time, or 29 out of 34 years, for a 17.7% average gain for the S&P 500. What derails that could be something systemic with the economy or politically, or disappointment out of the market leading companies like the Mag7. Years when the Santa Claus Rally fails to materialize, markets are either flat, bear markets, or at least a time when you can buy stocks cheaper during the year.”
Meanwhile, Meta (META), Broadcom (AVGO), and Tesla (TSLA) have rallied significantly this year, leading to a reduction in their weights in the Nasdaq 100 (NDX) (QQQ) in its annual rebalancing. That’s according to annual data compiled by Bloomberg.
Apple (AAPL), Nvidia (NVDA), Microsoft (MSFT) and Alphabet (GOOG) (GOOGL) have each been given higher weighting in the index. This is the second time that the index’s allocation for its biggest constituents has been tweaked to ensure they don’t influence the benchmark too much, given their meteoric gains fueled by the AI boom.
Among active stocks today, it wouldn’t be the holidays without some travel panic.
American Airlines (AAL) temporarily grounded all flights in the U.S. this morning due to a vendor technical issue. But the ground stop has since been lifted by the FAA, and flights are resuming.
American tweeted: “We have resolved a vendor technology issue that briefly affected flights this morning. We sincerely apologize to our customers for the inconvenience and have issued a travel alert to allow for additional flexibility.”
The precise nature of the issue has not yet been disclosed. But the carrier avoided anything close to the 2022 Southwest (LUV) holiday meltdown.
And a group of banks filed a lawsuit against the Federal Reserve over the annual stress test that requires lenders to uphold sufficient reserves for potential loan losses while also controlling the scale of share buybacks and dividend payouts.
“The current opaque regime, combined with the lack of clear standards for the global market shock and the operational risk charge, continues to produce capital charges that are inaccurate, volatile and excessive, resulting in reduced lending and economic growth,” said Greg Baer, president and CEO of the Bank Policy Institute, which represents megabanks like JPMorgan Chase (JPM), Citigroup (C) and Goldman Sachs (GS).
The news comes shortly after the U.S. central bank said it is considering significant changes to its stress testing framework to improve transparency and reduce the volatility of resulting capital buffer requirements, citing the “evolving legal landscape.”
In other news of note, Netflix (NFLX) will be in the spotlight on Christmas Day with its NFL broadcast debut. It will show the Kansas City Chiefs vs. the Pittsburgh Steelers at 1 p.m. ET, followed by the Baltimore Ravens and Houston Texans at 4:30. Beyoncé will also perform at the Ravens vs. Texans halftime show.
The Netflix roster of broadcasters and analysts secured from CBS (PARA) for the games includes Ian Eagle, Greg Olsen, Kay Adams, Drew Brees, Mina Kimes, and J.J. Watt.
The live NFL games, on one of the biggest holidays of the year, are considered a huge test for the company after it had streaming issues with the Mike Tyson-Jake Paul fight on November 15. Those issues included buffering, audio problems, and image quality for some viewers. Netflix has 282.3 million subscribers spread across 190 countries.
The company said, “We now know from experience what are the main pressure points in our infrastructure and are promptly addressing them ahead of the NFL games. Some behaviors of our live streaming systems are impossible to replicate in a test and are only visible at huge scale with real viewers. We studied that in detail and are adjusting our content delivery, encoding and streaming protocols accordingly.
For investors, it’s notable the games will have commercial breaks, with sponsors such as FanDuel (FLUT) and Verizon (VZ).
And instead of the Wall Street Research Corner, we move to the Victorian Square Mile of the City of London.
Trading-floor talk in London today centered on a surprise change in direction for boutique brokerage Scrooge & Marley Counting House.
The company, whose American depositary receipts trade under the symbol “HMBG,” announced a number of new initiatives before the start of trading today. Labor costs at the brokerage, for the coming fiscal year, will increase 100%, Scrooge & Marley said. Investors were taken aback, as wages have remained steady for more than a decade.
On analyst who follows the stock said: “The market was actually hoping for some traditional seasonal layoffs from Scrooge/Marley. It’s tough to say how investors will take this, but without a corresponding plan to boost revenue it will hurt earnings per share.”
Reached at his London residence, CEO Ebenezer Scrooge said only that “the spirits did it in one night” and refused to elaborate on his firm’s new direction.
“Must have been a full two bottles of spirits,” quipped one City trader this morning. Robert Cratchit, the No. 2 man at the company, was unavailable for comment after seen making rather merry.
In addition to the rise in labor costs, Scrooge & Marley has decided to invest a large portion of the substantial cash on its books in a private welfare enterprise designed to help thousands “in want of common necessaries” and hundreds of thousands “in want of common comforts.”
“We frankly would have preferred a special one-time dividend to dispose of that cash, or at least a stock buyback,” one portfolio manager said.
But others refused to count Scrooge out just yet, pointing to his long track history of maximizing profits and increasing shareholder value.
One trader said: “Scrooge may be getting in on the ground floor for the privatization of orphanages, union workhouses and prisons, which could prove very lucrative.”
Others focused on Scrooge & Marley’s latest purchases, including a prize turkey and a scuttle full of coal.
“They’re late to the commodities game, but energy and livestock are hot markets right now,” a London-based broker noted. Fowl futures were up a shilling in early-morning trading, while coal futures ticked up sixpence.
Scrooge may also be considering retirement, analysts said. Although he has yet to name a successor, he is rumored to be grooming a young member of the Cratchit family for the top slot.
Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.
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