Business

Ford Motor (F) shares plummeted Monday after UBS downgraded the Club holding — a call that strikes us as both belated and short-sighted given the stock’s considerable slide since January. With a dividend yield north of 5%, the Club is sitting tight. In a research note to clients, the bank warned that automakers like Ford and competitor General Motors (GM) are at risk of seeing their margins and earnings plummet next year, as recovering inventories and weaker consumer demand bring the industry into oversupply. As a result, UBS analysts lowered their rating on Ford to sell from neutral, while cutting their price target to $10 a share from $13 a share. The market took note, as Ford quickly found itself one of the biggest losers in the S & P 500 on Monday. Ford shares were down roughly 7.7%, at $11.26 a share, in midday trading. Keep in mind: Ford was not the sole subject of UBS’s note. Taking an overall industry view, the analysts updated price targets, ratings and earnings outlooks for both original equipment manufacturers — including Ford, GM and Volkswagen — and automotive suppliers such as Continental and Faurecia . Details on the downgrade For much of the Covid-19 pandemic, Ford and its peers have struggled to build enough cars to meet demand — the result of various supply-chain problems like semiconductor shortages. While chip availability is generally improving, UBS believes global auto production will register “zero growth” in 2023. “Demand destruction is no longer a vague risk, but has started to become a reality,” the analysts wrote. “Besides all the negative macro indicators, snippets like growing U.S. dealer inventories, weak used car prices, used car dealer profit warnings (CarMax) and our channel checks about deteriorating order intake and shorter delivery times for new cars are making us more cautious,” they explained. The firm is particularly worried about earnings at a time of improving vehicle availability amid softer buyer interest. Consequentially, it might not take long for an “oversupply” to develop, the analysts warned, “which will put an abrupt end to a 3-year phase of unprecedented OEM pricing power and margins.” That robust pricing power and expanding margins were the result of a limited supply of vehicles, healthy consumer interest and cheap credit that peaked during the pandemic. In 2023, UBS sees the operating margins of OEMs falling 400 basis points, or 4%, on an aggregate basis and overall per-share earnings declining by roughly 50% year-over-year. For Ford, specifically, UBS now estimates the automaker’s adjusted earnings before interest and taxes (EBIT) margin to fall to 2.9% in 2023, a 460 basis-point decline. The firm cut its EPS forecast by 61%, to 52 cents per share. These revised figures factor in significant revenue headwinds related to pricing and inventory mix. This essentially means UBS thinks Ford will no longer be able to pass on increased costs as easily as it did in recent years, while consumers may need to buy less profitable vehicle models due to economic pressures. The Club take With Monday’s UBS call, it’s important to not only consider what the analysts are saying, but when they’re saying it. As long-term Ford believers, we’re paying attention to both — especially the fact that Ford shares entered Monday’s session down roughly 41% year-to-date. Stocks are forward-looking assets, and investors have spent months worrying about how a potential recession would hurt cyclical industries like autos. For that reason, we think a lot of the bad news UBS is tracking may already be reflected in Ford’s stock price. Monday’s steep slide clearly shows shares can fall further, but we think UBS is too late to the game in waving the sell flag. Before we got here Monday, we’d made a number of timely Ford sales earlier this year at higher prices — including 1,750 shares on Jan. 18 , at $24.46 apiece, and 910 on April 6 , at $15.39 each. Both sales generated sizable profits for the Club, and the one in April was because we were explicitly worried about what an economic slowdown could do to Ford’s business. That context is helpful in understanding why we’re not heeding UBS’s call and heading for the exit. With the stock now carrying a dividend yield north of 5% and having profitably trimmed our position months ago, we can afford to be patient. We’re not buyers just yet and are hesitant to upgrade our rating on the stock to a 1 — our “buy-it-here” designation — until we gain more confidence in management’s ability to deliver on its profit outlook. Ford’s third-quarter earnings, which are set to be released Oct. 26, are an important near-term event. The company has already warned about inflationary pressures and supply-chain disruptions impacting results. However, we’re closely awaiting the full print and management’s commentary on the earnings conference call to get a better sense of the company’s outlook into 2023. (Jim Cramer’s Charitable Trust is long F. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.

Ford Motor Co. signage at the Washington Auto Show in Washington, D.C., Jan. 21, 2022.
Al Drago | Bloomberg | Getty Images

Ford Motor (F) shares plummeted Monday after UBS downgraded the Club holding — a call that strikes us as both belated and short-sighted given the stock’s considerable slide since January. With a dividend yield north of 5%, the Club is sitting tight. More

If you inherited a retirement account in 2020 or 2021, the IRS is waiving penalties for some heirs who needed to start taking required minimum distributions right away.
Owners of inherited IRAs and retirement plan beneficiaries have expressed confusion about the timeline for required RMDs, and asked for “transition relief” for missed 2021 and 2022 RMDs.

Zinkevych | iStock | Getty Images

If you inherited a retirement account in 2020 or 2021, the IRS is waiving penalties for some heirs who needed to start taking required minimum distributions right away, according to a notice issued Friday.
The new rule won’t apply until 2023.

Typically, there’s a 50% penalty when you skip RMDs or don’t take the full amount by the deadline, applying to the balance that should have been withdrawn.
Thanks to the Secure Act of 2019, certain heirs, known as “non-eligible designated beneficiaries,” have to deplete inherited retirement accounts within 10 years, known as the “10-year-rule.”
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Non-eligible designated beneficiaries are heirs who aren’t a spouse, minor child, disabled, chronically ill or certain trusts. The 10-year rule applies to accounts inherited on Jan. 1, 2020, or later.
However, there’s an even shorter timeline if the original owner already reached their “required beginning date” when their own RMDs needed to begin. In that case, heirs were expected to start taking RMDs immediately.

Owners of inherited IRAs and retirement plan beneficiaries have expressed confusion about the timeline for required RMDs, and asked for “transition relief” for missed 2021 and 2022 RMDs, according to the notice.

As a result, taxpayers who skipped RMDs from inherited retirement accounts won’t owe a penalty for 2021 or 2022, the IRS says.
If you already paid the penalty for 2021, you can “request a refund of that excise tax,” the notice says.
These guidelines don’t apply to regular RMDs, eligible designated beneficiaries or heirs who inherited retirement accounts before 2020.

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State of Freight

Dockworkers in Liverpool are set to start a seven-day strike on October 11 as U.K. and European ports remain congested from dual prior strikes in Liverpool and Felixstowe.
The new labor action will add to the existing delays in product delivery.
U.K. and Europe are markets for retailers including H&M, Inditex, Associated British Foods, Abercrombie and Fitch, Urban Outfitters, and Burberry.

A striking dockworker on a picket line outside the Port of Liverpool during a strike in Liverpool, UK, on Tuesday, Sept. 20, 2022.
Bloomberg | Bloomberg | Getty Images

Logistics experts are warning another strike set at the Port of Liverpool for Tuesday will only add to the existing delays in product delivery caused by the prior strikes at Felixstowe and Liverpool.
Dockworkers in Liverpool, a significant U.K. port and a port where the U.S. is the No. 1 trading partner, will start a seven-day strike from October 11 to October 17.

The Unite union told CNBC they will continue to hold these strikes until their pay matches inflation. Inflation in the UK is currently at 12.3%. Previous wage offers the union rejected were between 7% to 8.3%.
Trade productivity at Felixstowe, the U.K.’s largest container port, and Liverpool have suffered as a result of various labor strikes since August. As a result, the diversion of trade away from the ports has created a snowball of congestion at other ports in Europe.
Before the last round of strikes, Andreas Braun, Europe, Middle East, and Africa ocean product director of Crane Worldwide Logistics, was warning the delays in products arriving into the U.K. once off a vessel would be 45 days.

Arrows pointing outwards

Recently the Unite union said they are not ruling out a third strike in Felixstowe.
“The prior strikes in Felixstowe may have ended, but congestion at the port is on the rise,” said Alex Charvalias, supply chain in-transit visibility lead at MarineTraffic. According to its data, on Oct. 4 the total TEU (container) capacity waiting off ports limits was roughly three times higher than usual, reaching more than 99K TEUs (containers).

While the situation in Felixstowe worsens, other ports are being disrupted as a result of the prior strikes in Felixstowe and Liverpool.
“The Southampton port has already started facing the disruptions,” Charvalias said.
The weekly average TEU capacity waiting off port limits seems to be the highest recorded in recent months reaching 37,593 TEUs the last week of September.
“Looking at the first days of this week (week 40) the situation deepens,” he said.

Braun told CNBC that the disruptions of past strikes and the upcoming Liverpool strike will unquestionably aggravate the existing congestion.
“If the Felixstowe dockworkers agree to a third strike it will for sure create additional delays and extra costs for all transport companies involved,” Braun said. “However, as the consumer demand is low right now retailers could adjust their operation to the strike and plan deviations around. Unite made it clear that until they have reached their goal in pay rise, they will continue with further strikes, which eventually see congestion and delays rise to an unseen level.”

Retail stocks exposed to the strike

The list of publicly traded retailers that make a market in the U.K. is notable, including H&M, Inditex, Associated British Foods, Abercrombie and Fitch, Urban Outfitters, and Burberry. Apparel and footwear portfolio company PVH, which own brands such as Tommy Hilfiger, Calvin Klein, Warner’s, Olga, and True & Co, and VF Corp, which owns Vans, The North Face, Timberland, and Dickies, also make a market in the U.K. and Europe. Levi Strauss recently blamed supply chain delays as well as a strong dollar for its recent loss of up to $40 million in sales. Diageo is a huge exporter out of both Felixstowe and Liverpool.
“What we have seen over the last three years is supply chain changes can be expensive,” said Dana Telsey, CEO and chief research officer at Telsey Advisory Group. “The delays in logistics can impact the arrival of goods. You don’t want your product to arrive late. No retailer wants to discount their products as soon as it is set on the store shelf. Investors need to look at not only the fourth quarter for any impact but also for the first quarter of the calendar year as well.”
Telsey tells CNBC the winner of these supply chain delays will be TK Maxx, owned by TJX Companies, the largest U.K. off-price retailer.

The CNBC Supply Chain Heat Map data providers are artificial intelligence and predictive analytics company Everstream Analytics; global freight booking platform Freightos, creator of the Freightos Baltic Dry Index; logistics provider OL USA; supply chain intelligence platform FreightWaves; supply chain platform Blume Global; third-party logistics provider Orient Star Group; marine analytics firm MarineTraffic; maritime visibility data company Project44; maritime transport data company MDS Transmodal UK; ocean and air freight rate benchmarking and market analytics platform Xeneta; leading provider of research and analysis Sea-Intelligence ApS; Crane Worldwide Logistics; and air, DHL Global Forwarding; freight logistics provider Seko Logistics; and Planet,  provider of global, daily satellite imagery and geospatial solutions. More

Every weekday the CNBC Investing Club with Jim Cramer holds a “Morning Meeting” livestream at 10:20 a.m. ET. Here’s a recap of Monday’s key moments. Stay diversified Stocks fall ahead of key economic reports Quick mentions: F, PG 1. Stay diversified We start the week by reiterating how important it is for investors to keep their portfolios diversified, particularly in such a volatile market. During the “Morning Meeting” on Monday, we encouraged members just getting started to review the more than 30 stocks the Club owns and buy roughly 5 to 10 of them. A good example that illustrates the importance of diversification is what’s going on in the semiconductor space. Chip stocks dragged down the market on Monday after the U.S. announced new export controls limiting semiconductor sales to China . This is one of a myriad of issues that have plagued semiconductors over the past year, including waning demand in the PC and handset market, ongoing Covid-19 restrictions in China and recession fears. We have four chip stocks – Advanced Micro Devices (AMD), Marvell (MRVL), Nvidia (NVDA) and Qualcomm (QCOM). But we don’t advise individual Club investors to own all four names. Investors “should not have a massive amount of semis,” Jim said. We’re recognize these stocks area headed south in the short term, and have cut back on our positions to further diversify and strengthen the Club portfolio. 2. Stocks fall ahead of key economic reports Semiconductor stocks dragged down the Nasdaq Composite on Monday by 1.3%, to its lowest level since September 2020, while chip- and tech stocks also weighed on the benchmark S & P 500. The equities slide comes as investors are nervously awaiting producer price index (PPI)- and consumer price index (CPI) data due out this week — both key metrics of inflation that could determine future interest rate hikes by the Federal Reserve. The PPI could show inflationary pressures easing, while the CPI is still likely to reflecting rising prices, Jim said Monday. The S & P Oscillator was at 3.28% after Friday’s sell-off, which means we aren’t in oversold territory at the moment. We encourage investors to stay patient, as it’s likely the market will decline further. 3. Quick mentions: F, PG UBS downgraded Ford (F) to a sell, citing worries about the auto industry reaching oversupply in 3 to 6 months, while noting the company has the most stretched full-year guidance in the bank’s coverage of original equipment manufacturers (OEMs). We’ve been itching to buy back shares of the automaker, but we’re not planning to add to our position right now. Goldman Sachs downgraded Procter & Gamble (PG) to a hold, citing headwinds from the strong U.S. dollar and a slowdown in Covid-19 pandemic market-share gains. (Jim Cramer’s Charitable Trust is long AMD, F, MRVL, NVDA, PG, QCOM. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED. More

Digital World Acquisition Corp. shareholders are due to vote Monday to extend the merger deadline with Trump Media beyond Dec. 8.
DWAC has previously warned that a failure to extend the deadline could force it to liquidate.
An executive at Trump Media filed a whistleblower complaint to the SEC and said he believes the company will go bankrupt.

The former US President announced his intention to create a new social media platform after he was banned from Facebook and Twitter last year.
Leon Neal | Getty Images

Shareholders of Digital World Acquisition Corp., the blank-check company set to take Trump Media and Technology Group public, are due to vote Monday on a proposal to extend the merger deadline and buy the company time to find financing.
With $1 billion in financing already at risk, DWAC needs 65% of its shareholders to approve the extension for the merger with Trump Media beyond the current deadline of Dec. 8. The special-purpose acquisition company has previously warned that a failure to extend the deadline could force it to liquidate. The company is also dealing with the fallout from a Trump Media executive’s whistleblower complaint to federal regulators.

Monday’s vote is the continuation of a monthslong effort to garner enough shareholder support for the extension. The company held a shareholder meeting on the matter in September but was unable to rally enough votes in favor. That meeting was adjourned four times before DWAC CEO Patrick Orlando initiated a built-in, three-month extension with a $2.8 million contribution from his company Arc Global Investments II.
Orlando has been attempting to drum up votes on Trump Media’s Truth Social platform, at one point urging Trump Media CEO Devin Nunes and its chairman, former President Donald Trump, to help publicize the effort.
DWAC’s private investors were set to provide $1 billion to Trump Media upon completion of the merger. But at least $138 million of that funding was withdrawn, and the company moved its address to a UPS Store. One of the investors told CNBC that they were underwhelmed with user numbers compared to Twitter and feared the legal obstacles facing the deal.
Trump founded Trump Media and its Truth Social platform after he was banned from Twitter over the Jan. 6, 2021, Capitol riot, in which hundreds of his followers stormed the building in an attempt to block Congress from confirming Joe Biden’s victory in the 2020 presidential election. Trump, who is considering a run for the White House in 2024, has built a following of 4 million on his platform, compared to the 80 million or so he had on Twitter.
DWAC’s stock last week slid on the news that a deal for Elon Musk to buy Twitter may be close. Musk has previously said he would reinstate the account of the ex-president.

Beyond a shareholder vote, legal obstacles continue to face a DWAC-Trump Media merger. The deal is the subject of both a criminal and an SEC probe into possible securities violations relating to potentially illicit conversations had before the merger was announced.
A senior vice president at Trump Media, William Wilkerson, filed a whistleblower complaint alleging securities violations in August. Wilkerson, who describes himself as one of the founders of the company, no longer believes in its viability.
“One way or another, this company is going to go bankrupt,” Wilkerson told the Miami Herald. “I don’t think the company is going to be approved by the SEC.”
Trump Media and DWAC didn’t immediately respond to requests for comment about the whistleblower.
Trump Media recently announced that the company was exploring legal action against the SEC for delaying the deal.
Trump, himself the subject of a federal criminal probe into whether he illegally kept sensitive government documents, has warned on multiple occasions that he could ultimately decide to keep his company private. That would kill the deal, liquidating DWAC and splitting its trust among shareholders, paying out around $10 per share. The stock currently trades around $17 per share, below its 2022 peak of $97 in March.
“If they don’t come with the financing I’ll have it private,” Trump said to supporters in an early-October rally in Michigan. “Easy to have it private.”

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Rivian late Friday said it is recalling over 12,000 vehicles for a potential steering defect.
The issue involves a fastener that may not have been tightened properly at the factory.
The specifics of Rivian’s recall have investors concerned.

Production of electric Rivian R1T pickup trucks on April 11, 2022 at the company’s plant in Normal, Ill.
Michael Wayland / CNBC

Shares of Rivian Automotive are set to open sharply lower Monday after the electric vehicle maker said late on Friday that it is recalling over 12,000 vehicles – nearly every EV it has made to date – to double-check that a fastener in the vehicles’ steering assembly was properly tightened.
Rivian’s shares were down over 6% in premarket trading on Monday morning.

The recall includes every Rivian R1T pickup and R1S SUV made through late September, as well as some of the EDV delivery vans the company produced for Amazon — 12,212 vehicles in all — though the company estimates that only about 1% of those have the defect.
Through the end of September, Rivian had built about 15,300 vehicles since starting production in the fall of 2021. The company had set a goal to reach 25,000 vehicles produced by the end of the year.
The defect involves a fastener in the front suspension that may not have been tightened fully in some vehicles. If the fastener isn’t tight, Rivian said, it could affect the alignment of the front wheels, potentially causing vibrations and noise and changing the feel of the steering.
In rare instances, Rivian said, the fastener could come completely loose – a situation that could lead to a loss of steering control and potentially a crash.
Nearly all automakers have recalls from time to time. But the numbers involved in Rivian’s – and the potential consequences if a fastener works itself completely loose – have investors concerned.

Wedbush analyst Dan Ives, who follows Rivian closely, said in a Monday morning note that while auto recalls are routine and this one isn’t likely to be expensive, Rivian is “under a bright spotlight” and further quality or production issues could hurt the company’s standing with investors.  
“This is a black eye for Rivian,” Ives wrote.
Rivian said that it is aware of seven reports of issues that could be related to the fastener in question. It isn’t aware of any injuries related to the defect.
The repair is simple: Rivian’s service centers will check the fasteners and tighten them if needed. Rivian has notified affected customers and plans to complete the repairs within 30 days.
The cost of the recall is unlikely to dent Rivian’s substantial cash hoard. The company had $15.5 billion on hand as of the end of the second quarter, far more than most rival EV startups.
Rivian’s shares have fallen about 69% since the beginning of the year.

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“Earthdivers,” a new comic book series from “The Only Good Indians” author Stephen Graham Jones, tells the story of a Native American who travels back in time to kill Christopher Columbus.
The first issue was published days before Indigenous People’s Day and has gone into a second printing.
Jones said Disney-owned 20th Television optioned the comic book for development as a series, possibly at streaming service Hulu.

“Earthdivers” writer Stephen Graham Jones at New York Comic Con on Oct. 7, 2022. 
Mike Calia | CNBC

NEW YORK – Even in fourth grade, Stephen Graham Jones thought the heroic story of Christopher Columbus was a crock.
“You mean the guy who stole all our land and killed our people and turned us into slaves?” said Jones, author of the New York Times-bestselling supernatural thriller “The Only Good Indians” and a member of the Blackfeet Native American tribe. “That’s a hero?”

About 40 years later, Jones has channeled that youthful confusion and anger about Columbus into a new comic book series called “Earthdivers,” which is about a bloody quest back in time to 1492. The first issue, released last week, has already gone into a second printing due to strong demand, publisher IDW said Sunday. The next issue is due in early November, and a television series is in development at a Disney unit.
The premise: It’s 2112, Earth is an environmental ruin, the super rich have fled the planet, and a group of Native Americans discovers a cave in the desert through which they can time travel. They send an emissary to the past with the goal of killing the man they see as the root of their problems – Columbus.
“I’m not smart enough to invent a time travel machine, but I can invent narrative,” said Jones, who lives in Boulder, Colorado, where he teaches college courses on creative writing, film and, yes, comic books.
Despite the provocative material and publishing date – days before Indigenous People’s Day in the United States, which is still celebrated by many as Columbus Day – Jones said he hasn’t gotten any pushback on “Earthdivers,” not even from would-be Silvio Dante types. (A 2002 episode of “The Sopranos” depicted members of the Italian crime family fighting Native Americans who are protesting Columbus Day.)
“I’ve only gotten support and people agreeing that if we could, we should go back and take Columbus out,” Jones said in an interview Friday at New York Comic Con.

But it’s not so simple in “Earthdivers.” Like in other time travel sagas, such as Ray Bradbury’s short story “A Sound of Thunder,” which features big game hunters altering the future by messing with prehistoric life, and Stephen King’s doorstop novel “11/22/63,” in which the protagonist tries to prevent JFK’s assassination, the mission in the comic is easier planned than done. The main character, Tad, makes bloody life-or-death decisions while he sets sail for the New World with the Nina, the Pinta and the Santa Maria. By the end of the first issue, Tad fears he is becoming a monster.

“It’s easy to say representation matters. But it’s different to understand it.”

Stephen Graham Jones

Jones himself isn’t sure he’d go through the portal to hunt down Columbus. “I’d be worried I’d bring the flu back and wipe out the 15th century,” he said.
Hollywood wants in on “Earthdivers,” too. According to Jones, he received several offers before Disney-owned 20th Television optioned it for development into a series. Jones said he will be an executive producer on the “Earthdivers” show.
Jones said it could wind up on streaming service Hulu, which has become a hot spot of sorts for stories about Indigenous people in the Americas, including FX’s coming-of-age dramedy “Reservation Dogs” and “Predator” prequel “Prey.” He’s a big fan of both, and he’s encouraged to see more Indigenous people in media.
“It’s easy to say representation matters,” Jones said. “But it’s different to understand it.”
He offered some examples.
“When I was a kid coming up, looking at the television screen, I never saw my own face. So I had to co-opt people into my tribe. I stole Rambo because he had a headband. I stole Conan the Barbarian because he’s from the great north, and so are the Blackfeet. I stole John McClane because he’s a guerilla fighter in ‘Die Hard.’ I had to do that,” Jones said.
“What thrills me is that kids coming up nowadays, they don’t have to abduct people into their tribe. They see their tribe, they see their face on the screen,” he added. “I think that makes you feel like part of the world in a completely wonderful way.”

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Online sales this holiday season are projected to see their smallest growth since Adobe Analytics began tracking the figure in 2015.
Discounts have been ongoing this year as retailers work to get rid of bloated inventories.
The early deals are expected to cut into sales on Black Friday and Cyber Monday.

A contractor working for Amazon.com cleans a delivery truck in Richmond, California, on Tuesday, Oct. 13, 2020.
David Paul Morris | Bloomberg | Getty Images

After months of sales and markdowns from retailers scrambling to offload excess inventory, getting shoppers to click on deals this holiday season won’t be easy.
Already, retailers had been struggling to move products after miscalculating what shoppers would want coming out of the pandemic. Soaring inflation has also been squeezing consumers, forcing companies to slash prices further to get them to spend. And to compete for holiday spending, retailers are offering deals earlier and earlier.

All those factors are expected to dampen demand for the big holiday sales — even online, where consumers have been doing more their shopping in recent years.
“The shape of the holiday season will look different this year, with early discounting in October pulling up spend that would have occurred around Cyber Week,” said Patrick Brown, vice president of growth marketing and insights at Adobe, which uses transaction data from retailers to make annual forecasts for online holiday sales.
This year, online sales on Black Friday are expected to increase just 1% from a year ago, while Cyber Monday revenue is expected to grow 5.1%, according to Adobe. Overall, online spending throughout the holiday season is forecast to grow 2.5%, the smallest growth since Adobe started tracking the figure in 2015. Adobe even warned of a potential decline, projecting a range for sales to be between down 2% and up 5%.

Bleak Friday

Last year’s holiday shopping season got off to an early start as well. But that was because shoppers were scrambling to secure gifts as supply chain bottlenecks led to shortages on a wide range of products.
Now, retailers are the ones offering deals early, either to get rid of inventory or to compete for business. The ongoing discounting means spending may be spread out more this holiday season.

“This is first year since e-commerce came into its own, where things are a bit more unpredictable,” said Taylor Schreiner, senior director of Adobe Digital Insights.
Amazon is holding its second Prime Day of the year Tuesday, which marks the first time the online retail giant has had two of the discount days in a year. Major retailers such as Target and Walmart are getting started early too.
Walmart’s online event, Rollbacks & More, runs from Monday to Thursday with markdowns on electronics, toys, apparel and more. Target’s Deal Days ran last week, and the retailer is stretching out its price match guarantee from the start of that event through Christmas Eve.
The early deals could mean people are already stocked up on gifts and decorations by the time the holiday shopping season traditionally kicks off after Thanksgiving. Only 20% of consumers to shop on Black Friday, according to accounting firm PricewaterhouseCoopers. That’s down from 36% in 2019 and 2020; the question was not asked last year.
And in a break from past years, more stores may stay closed on Thanksgiving day this year. Walmart and Target have announced their stores will be shuttered for the holiday.

Smaller hauls

The inflation that’s hitting supermarket shelves isn’t as stark online, according to Adobe. That’s largely because fuel and grocery sales, which have seen some of the biggest price hikes, are usually purchased in person.
Still, inflation is affecting online buying habits. On Amazon’s Prime Day in July, consumers opted more for necessities such as dishwasher pods and diapers, and away from splurge items such as Instant Pots and Roombas.
The pullback in spending is likely to carry over into the holidays. A survey from KPMG found that 85% of holiday shoppers are concerned about inflation, and that 34% will opt for cheaper gift categories.
“Consumers will be looking for promotions this holiday season, and retailers should be looking to respond by having desirable gifts for the budget conscious consumer,” said Matt Kramer, head of KPMG’s consumer and retail sector.
Adobe expects retailers to try to entice gift purchases this season with deep discounts, especially in technology and toys, where it forecasts prices will be marked down over 20%. But even if those discounts lure shoppers, the price cuts will curb companies’ profits.

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