Core Insights - The article discusses Amazon's significant increase in capital expenditures (capex), projecting it to reach $200 billion by 2026, which is substantially higher than previous estimates of around $140 billion and consensus estimates of approximately $146 billion [2][5][4] - The acceleration of Amazon Web Services (AWS) growth to 24% is highlighted as a positive aspect, exceeding market expectations of 21-22% [2][3] - The competitive landscape among major tech companies, including Google, Microsoft, and Meta, is driving aggressive investments in compute resources to meet rising AI demand [7][19] Capital Expenditures - Amazon's capex for 2026 is projected at $200 billion, representing a 50% increase from 2025, which itself was a 60% increase from 2024 [3][4] - Analysts had previously estimated a much lower capex, indicating a significant upward revision in spending expectations [5][2] - The high capex is seen as necessary for Amazon to capture AI demand and maintain its competitive edge [4][19] AWS Growth - AWS growth has accelerated to 24%, which is a critical metric for evaluating the effectiveness of Amazon's increased spending [2][12] - Analysts expect AWS growth estimates to rise further due to the substantial capex commitment [12] - AWS margins have been solid, hovering around the mid-30% range, with potential for further improvement [12][13] Competitive Landscape - Major tech companies are competing for compute resources, which are essential for sustaining market advantages in the AI space [7][19] - Amazon's previous underinvestment in compute resources is acknowledged, emphasizing the need for increased spending to avoid falling behind competitors [9][19] - The demand for compute resources remains high, with companies like Nvidia experiencing sustained demand for their products [9][19] Long-term Outlook - The long-term growth potential for Amazon is supported by its high-margin businesses, including AWS and advertising, which are expected to drive significant operating margin expansion over the next 5 to 10 years [23][24] - Amazon is projected to exceed $1 trillion in annual revenue within the next decade, indicating substantial earnings potential [24] - The perception of Amazon as playing catch-up in the AI space is acknowledged, but the company is making progress in scaling its capabilities [25][28]

Consumer Sentiment & Economic Impact - University of Michigan consumer confidence numbers are not strong three weeks before Black Friday [1] - Low consumer sentiment is observed, but upper-middle and luxury consumer spending remains strong [2] - Government shutdown negatively impacts lower to middle-income consumers, widening the K-shaped economy [3] Retail & Inventory - Overall inventory levels appear to be in good shape, with some inventories brought in early to manage tariff impacts [5] - Managing margins against higher costs due to tariffs will be a headwind in the first half of 2026 [5] - Promotions are not significantly increasing heading into Black Friday, and Amazon Prime Day in October was solid but not exceptionally strong [6][7] Value & Off-Price Retail - Lower-income consumers are focusing on necessities and value pricing [7] - Value is constituted by brand and price, with off-price retailers, Walmart, and Costco representing value options [8] - Retail real estate landlords are seeing strength in leasing from value players [9]

E.L.F. Beauty Analysis - E.L.F. is increasing product costs by approximately $1 [2] - Core E.L.F. brand growth is moderating to around 2-5% in the second half, previously around 20% [3] - Retailers are destocking and facing tough comparisons, impacting E.L.F.'s core brand growth [5] - Consumption trends in the market are attractive, around 7-10% [5] Tapestry (Coach & Kate Spade) Analysis - Coach is experiencing strong growth, up 21%, driven by capturing Generation Z customers and offering good value [7] - Coach bags are priced around $300-$500, offering value compared to luxury brands like Louis Vuitton and Cartier ($2,000-$3,000+) [8] - Kate Spade is still a work in progress [8] - High expectations were set for Tapestry coming into the quarter [9] Consumer & Retail Trends - Higher-income spenders are increasingly important to companies [11] - Retailers with a middle-income positioning, like department stores, face a tougher environment [12] - The US consumer has been resilient with low unemployment [13] - Consumers are prioritizing value and low price points [13] Canada Goose Analysis - Direct-to-consumer comps are up 10% [15] - Marketing expenses were higher than Wall Street expected, impacting EBIT [15]

Market Overview - The fourth year of the bull market begins with skepticism and disbelief among investors, which has characterized the entire market run [1][2] - Despite negative sentiment, buying the dips has proven profitable for investors over the past 45 years [2] - The Dow gained 238 points, the S&P 500 advanced 5.33%, and the Nasdaq climbed 0.52%, indicating strong market performance despite initial concerns [3] Earnings Reports and Expectations - Upcoming earnings reports are expected to exceed expectations, with key companies reporting throughout the week [6] - Cleveland Cliff's report is anticipated to provide insights into the real economy's performance [6] - American Express reported a strong quarter, which may positively influence other credit card companies like Capital One [10] Sector Insights - Coca-Cola is expected to deliver consistent results, while GE Aerospace is projected to surprise positively due to maintenance services for aircraft [8] - 3M and Danaher are also expected to report strong earnings, with Danaher potentially recovering from a previous downturn [9] - Tesla's upcoming report is anticipated to focus on self-driving technology rather than car sales, which may appeal to investors [12] Economic Indicators - The Bureau of Labor Statistics is expected to release a CPI report, with a number below 3% being significant for the market and Treasury yields [18] - Procter & Gamble's earnings report is highly anticipated, with expectations of a strong performance following recent stock price recovery [19] Conclusion - The market is expected to continue its upward trajectory as earnings reports drive stock performance, with a focus on individual company results rather than index performance [20][22]

Recurring theme from retailers that have reported thus far. Some have raised prices because of it, including ELF last week. The National Retail Federation warning last week that the direct result of tariffs will be higher prices and fewer capital expenditures.But my next guest is staying positive into earnings. Joining me now is Chris Horver, retail analyst at JP Morgan. Chris, it's great to have you on the show.And let's start right there. What what is sparking the positivity. Well, it's a little bit of wh ...