Camelot Portfolios Talking Points

Tis the Season

As Thanksgiving passes us in the rearview mirror, Christmas season becomes the major focus for businesses around the world. The 30 shopping days before Christmas are historically the busiest days for consumer businesses. The two main days for sales come from two days in particular, Black Friday and Cyber Monday. As of yesterday, Cyber Monday accounted for $3.45 billion in sales online (Wahba). This is a 12.1% increase from last year’s Cyber Monday (Wahba). Notable toys for this festive season are still mostly electronics related items like the PlayStation 4, Xbox One, IPhone, and Amazon Fire (Wahba).

Shifts in consumer behavior are leaning towards clicking a button online rather than fighting the rush in stores. Reports from the National Retail Federation show estimates of a 2 percent year over year increase to 154 million customers paying for items over the weekend (National Retail Federation). The NRF reported 44 percent of consumers shopped online while 40 percent of consumers surveyed went to brick and mortar stores (National Retail Federation). Although there was a modest increase in activity in shopping, customers on average spent less than they did last year, a decrease of 3.47 percent totaling $289.19 on purchases per person (National Retail Federation).

Sales for the 2016 Christmas season are trending in the right direction with a strong start over the Thanksgiving weekend. While incentives on the latest and greatest trinkets catch the consumer’s eye, it is easy to deviate our focus away from the bottom line. Hopefully, balance sheets and sales in this quarter reflect the behavior in our economy.

OPEC Changes Production

In the early working hours on Wednesday morning officials from OPEC decided to cut oil production. The oil cartel will reduce output by 1.2 million barrels per day to 32.5 million barrels per day (Grant Smith). Before the futures market opened crude prices increased 7 percent when headlines started to pour in (Grant Smith).

At the beginning of the week, negotiations seemed to stall between Saudi Arabia and Iraq/Iran (Grant Smith). Officials were pushing cuts to come from the largest producer, Saudi Arabia, rather than secondary producers.  This initial agreement by OPEC is the first cut in production since 2008 (Grant Smith). Production level targets are effective starting January 1, 2017.

Changes in production quotas could mean an opportunity for many oil producers outside OPEC. US drillers have unloaded non-favorable producing assets as well as written off a majority of these on their income statements over the past year and a half. In particular, offshore and shale wildcat companies have de-levered capital to loosen their interest expense. It is likely production will still come from existing rigs and slow gains in rig count.

OPEC still has a say on the direction of crude, but non-OPEC producers are catching up. Economically his gradual change over time will create more crowding in an already competitive marketplace. In the long term, OPEC countries like Venezuela, Nigeria, Iraq and Iran may want to widen its economic footprint rather than harvesting from one tree.

GDP Revised Upward

Yesterday, the Bureau of Economic Analysis released its revised 3rd quarter Gross Domestic Product (GDP). The revised growth rate increased to 3.2 percent from the estimated 2.9 percent in October (Economics). The revised estimate is the highest GDP growth rate in two years (Economics). A major contributor to the revised estimate was the increase in personal consumption. A major contractor to GDP growth was the decrease in fixed investments (Economics).

The unexpected revised upward GDP growth continues to point the US economy on a slow and steady growth rate. Whether or not increases in interest rates will change the overall projections is the question some economist are asking themselves, but shifts in productivity growth and population growth seem to point to long-term headwinds for the US economy.


Compiled by the Camelot Portfolios Investment Committee

Darren Munn, CFA, Chief Investment Officer

Sarah Berndt, Portfolio Manager

Eric Kartman, Research

Drew Steinman, CPA, Trader/Research

Frank Echelmeyer, MBA, CKA®, Advisor Consultant

-for Broker/Dealer and RIA use only-



Economics, Trading. Trading Economics. Aug 2016. Aug 2016.

Grant Smith, Wael Mahdi, Javier Blas. OPEC Agrees to Cut Production in Drive to End Record Glut. 30 November 2016. 2016.


Wahba, Phil. Cyber Monday Sales Hit a New All-Time Record in 2016. 29 November 2016. Web.



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