Happy Holidays! This week and next week will be relatively void of news, events and data to analyze and cover. But? I commit to sharing valuable content with you every single week. This week, I put together a lengthy piece on the income statement, with a boatload of needed context and nuance to explain how I read it.

Table of Contents

• 1. Income Statement 101

  • a. Introduction

  • b. Demand Metrics

  • c. Profits & Margins

  • d. GAAP (Generally Accepted Accounting Principles) …

  • e. Quick Wrap-up Notes

• 2. High Growth Gross Profit Comp Sheet

• 3. DraftKings (DKNG) – New Data

• 4. Market Headlines

• 5. Macro

1. Income Statement 101

a. Introduction

Learning how to read and contextualize financial statements is a prerequisite for effectively stock picking for the long haul. It helps us evaluate the health of a company, what their resources allow them to do, and how they’re performing.

The income statement offers a picture of a firm's financial results over a finite period of time (increments of 3 months). It’s this financial statement that shows us how much demand a firm generated and how profitable that business was. Importantly, unlike the cash flow statement, the income statement uses accrual accounting. Accrual accounting records revenue when the goods or services for that revenue are delivered/completed. It deducts expenses when the company receives the good or service that the expense entailed.

b. Demand Metrics

Revenue:

Revenue is the most common demand metric and is often referred to as the “top-line” on the income statement. Some companies report this in gross terms, while some exclude returns/cancellations and report in net terms. Net disclosures are especially important for consumer-facing firms and marketplaces, where returns are simply a natural part of the business model. And while this number is generally understood, there are several more metrics to contemplate when judging the complete demand picture.

ARR:

Annual Recurring Revenue (ARR) offers a next 12-month view of how much visible (or recurring) revenue a firm expects to realize. This is highly important for subscription-based businesses with multi-year contracts. Firms like CrowdStrike consider it their most important demand gauge. For other consumption-based models like Target, Delta or Snowflake, ARR isn’t relevant as customers pay as they consume and consumption is not guaranteed to recur.

RPO (Remaining Performance Obligations):

Backlog is secured contracts or demand waiting to be fulfilled and billed for at some point in the future. Deferred revenue comes when a customer pays for a good or service in advance. Deferred revenue is then recognized as revenue when the work is done (based on accrual accounting). Remaining Performance Obligations (RPO) = deferred revenue + backlog. This is a forward-looking reading for how much service fulfillment and revenue recognition should be enjoyed. You’ll also often hear the terms “bookings” and “billings” thrown around. Bookings represent business contracted over a finite timeline but not yet completed. This feeds backlog growth (and so RPO) and is considered “unbilled demand.” Bookings turn into billings when that contracted business is invoiced. This invoicing can be based on pre-set schedules or be more fluid.

If billings occur for services that have not yet been conducted, it boosts deferred revenue. If billings occur for services that have been completed, it adds to current revenue and does not boost deferred revenue. In this case, these billings will sit in accounts receivable until the company is paid and revenue is recognized. Companies like Salesforce will routinely provide “current RPO” which is RPO expected to be recognized as revenue at some point over the next 12 months. 

Demand Retention & Expansion (Most relevant for subscription businesses and companies with multi-year contracts):

Next, there are a few other important metrics to consider when learning how quickly revenue contribution from a firm’s existing client base is growing. These are excellent statistics that measure the quality of customer cohorts, compare how that quality is trending from year to year, and gain insight into how much growth runway is left within existing customers. Gross revenue retention (GRR) measures existing client end-of-period revenue vs. beginning-of-period revenue. It does not credit existing client revenue expansion if a customer adds a new product, for example. It is merely trying to capture and depict customer churn. As an overgeneralized rule of thumb, 95%-97% GRR is considered good, while anything above that is considered great. 

Net revenue retention (NRR) is the same as GRR, except it includes the impact of existing customer upsells, so captures both churn and growth runway for an existing book of business. NRR is often called dollar-based net revenue retention (DBNRR). Generally speaking, below 100% NRR is an issue, as it shows churn is a larger headwind than the tailwind of customer expansions. 100%-110% is considered fine, 110%-120% is good and 120%+ is great. As an important caveat, sometimes companies shift focus to winning new business vs. growing existing customer business. This can lead to NRR pressure being the correct concession to make, as focus on winning more customers can sometimes be a more lucrative pursuit. SentinelOne is a great example of this right now. Lastly, dollar-based net expansion rate (DBNER) isolates existing customer revenue growth and excludes the impact of churn.

Like ARR, these retention & expansion-minded metrics are valuable for recurring revenue or subscription business models. 

Demand Pipeline:

Demand pipeline is an even more forward-looking demand metric than RPO. This measures the size of potential contracts from interested new customers and cross-sell opportunities within existing client bases. This is purely unbooked, forward-looking and a much more speculative and subjectively calculated demand metric than RPO. Some companies only consider advanced, high-probability opportunities to be part of the pipeline; some companies consider any company that has expressed any preliminary interest at all to be part of the pipeline. For this reason, it’s not a valuable metric for comparative analysis, as calculations are far from uniform across companies. It is, however, more valuable when observing how a company-specific stream of new opportunities is trending.

Demand Summary & Thoughts:

Revenue on an income statement helps us understand how a company’s demand has been trending; these metrics, in addition to a company’s forward revenue guidance, tell us how that demand should trend when looking ahead. If revenue growth is stellar, but backlog is quickly shriveling up, that could mean a company’s best growth days are behind it. Considering that stocks trade on forward expectations, this is when even rapid, outperforming revenue growth can be punished. Stocks will react aggressively to sharp disappointment or positive surprise in these demand metrics BECAUSE they hint to investors what revenue will look like in future quarters.

c. Profits & Margins

Gross Profit:

Gross profit is revenue after input costs, or “cost of goods sold” (COGS) are deducted. I’ll use these two terms interchangeably. Gross margin is gross profit divided by revenue. Cotton for a Nike sweatshirt, diesel for JB Hunt and app store fees for Duolingo are all considered to be COGS, and that’s important to highlight. Input costs look entirely different across industries and input cost intensity varies widely across various sectors too. For example, software has very low relative intensity. Most of the COGS come from paying hyperscalers for access to infrastructure, and average GPM for the sector as a whole is over 64%. For car makers, the steel, semiconductors, engine, battery etc. that go into making each unit lead to higher COGS. So? Average GPM for the sector is below 15%. For branded drug manufacturers, exclusivity periods (to protect hefty R&D investments) artificially block competition from entering for a period of time. This removes competitive risk, juices product differentiation and inflates GPM for these companies, leading to a 60%+ GPM on average. All of this is to say that there’s granular nuance for each sector that means we cannot fairly compare GPM between dissimilar industries. But? We can compare it to similar peers to glean insight. And? We can closely track GPM trends for specific companies to see if pricing power is improving or worsening. 

For example, if two competitors in endpoint security, with similar scale, boast GPMs of 80% and 70%, respectively, that directly hints at quality of product offering. Why? Because quality fosters pricing power, and pricing power directly leads to higher GPM. If I can sell something that costs me $5 in COGS to make for $11 instead of $10, GPM rises. This is why qualitative and quantitative analysis are always tightly correlated. Do you claim to have amazing products and insane pricing power? Cool… your GPM should look better than the other guy’s. You should be adding more revenue than them too. Within examples like Nvidia, its sky-high gross margin is the direct byproduct of selling better GPUs than anyone else on the planet can make.

As always, there’s more context needed when determining if GPM contraction is actually concerning or not. Intuitively, 2 years of contraction is more alarming than a random quarter of contraction, but there are more items to consider. Sometimes, GPM contraction is related to changing product mix. For Shopify, its thriving payments suite has led to another massive lever for profit dollar growth. At the same time, the margin contribution from payments is dilutive to overall GPM. This is a concession Shopify is elated to make, as it knows doing so allows it to maximize overall gross profit dollars. Stocks are valued based on profit dollars and profit growth… not margins. A company with $10 billion in gross profit growing 100% a year with a 1% margin will be more valuable than a company with $1 billion in gross profit growing 50% a year with a 99% margin.

Next, exogenous factors like worsening macro can also lead to temporary GPM contraction. Some portion of input costs will often be fixed. If, using our previous example, bad macro leads to $5 in input costs yielding $9 in revenue instead of $10 in revenue, that will lead to GPM contraction, even if a company’s pricing power in a normal environment is intact. It’s very hard to be entirely immune from macroeconomic swings. Finally, one-off items like inventory impairment charges for Lululemon last quarter can temporarily weigh on GPM, with that headwind being transitory rather than a structural byproduct of a permanently worsening product suite.

One more caveat on using GPM in comparative analysis. CFOs have a certain degree of autonomy when deciding what is considered an input cost and what is considered an “operating cost” (much more on this next). When comparing GPM quality between similar companies, it’s important to make sure GPM accounting is roughly similar or to know when it isn’t. Skillz and other bubble stocks during the pandemic loved classifying every expense as anything other than an input cost. This led to a sky-high, nearly 100% gross margin that these companies sold as a reason for shareholders to believe free cash flow and net income would eventually follow. But? This wasn’t showing a compelling profit structure. It was showing a reshuffled income statement that would never deliver sustained profit growth.

Finally, some companies like PayPal disclose a different, yet related metric for understanding input cost intensity called transaction profit. Transaction profit is simply transaction revenue minus costs stemming directly from those transactions. For example, PayPal shares fees with other industry players such as card networks and transaction margin tells us how profitable a transaction is after all mouths are fed.

Operating Expenses & Income:

There are three major operating expense (OpEx) buckets – research and development (R&D), sales & marketing (S&M) and general and administrative (G&A). Sometimes, companies report SG&A as a single bucket.

After subtracting input costs and these three common OpEx buckets, we’re left with earnings before interest, tax, depreciation and amortization (EBITDA). S&M involves the pursuit of growth via marketing, advertising and overall go-to-market optimization. Whether that’s participating in request for proposals (RFPs), influencer agreements, performance marketing or brand building, it’s considered S&M. G&A entails day-to-day expenses to support core company operations. Human resources, IT, legal fees and rent are good examples of G&A.

R&D costs are to drive innovation, updates, and entirely new products to eventually create more growth. The segment includes research teams, trials, split-test regimens and more experimentation. The Trade Desk building unified ID 2.0, Uber upgrading routing algorithms, Meta creating Threads or Alphabet upgrading their performance max (PMAX) advertising tool all came from R&D investments. Importantly, this does not include building a brand new data center, investing billions into new Disney park resorts or Cava building new stores or commissary kitchens. That’s all considered capital expenditures (CapEx), which we’ll explore in the cash flow statement article coming later.

There’s a bit of gray area in terms of the line between R&D and CapEx and some discretion in classifying expenses as R&D or CapEx. By and large, CapEx involves the construction of large, concrete assets or the accumulation of intangible assets like a brand or a patent. R&D usually involves creating new products with existing assets, improving current offerings or exploring scientific breakthroughs with commercial implications. You can see how the definitions can create some overlap, especially when building things like a software add-on. And candidly, I don’t care all that much which option a CFO chooses for subjective line items. 

Why? Because from EBITDA, we then deduct depreciation and amortization. When a company incurs CapEx and adds physical or intangible assets in that way, all of these assets have “useful lives.” That essentially means they can provide value for a finite amount of time before becoming obsolete. To account for this, we usually (not always but usually) divide the perceived value of the asset by the number of years it’s expected to be useful and deduct it as an expense on the income statement in linear increments. This is called the “straight-line method.” If this involves a tangible asset, it’s straight-line depreciation. If this involves an intangible asset, it’s straight-line amortization. This is why I don’t pay much attention to whether companies classify borderline expenses as R&D or CapEx. Over time, these costs will be incurred on the income statement regardless.

Just like with other forms of cost classification, there’s a bit of flexibility here for CFOs, which has been especially relevant over the past year. Deciding how long something will be useful is inherently subjective. And? Stretching out those timelines directly lowers depreciation and amortization expenses and boosts overall income statement profitability. We’ve seen every mega-cap tech name make this decision to extract more value out of their legacy servers and infrastructure and avoid more investments there as they focus on foundational GenAI architecture investments. They all extended useful lives of these legacy servers and all enjoyed temporary boosts to Y/Y profit comps. This was not at all shady, it’s just yet another thing to keep in mind when dissecting income statements. These companies should be forgoing investments in aging hardware and earmarking those resources for the GenAI boom. And they are.

After accounting for all of these expenses, we are left with Earnings Before Interest and Tax (EBIT). This is often just called “operating income,” but the two are not always identical. Operating income can sometimes (not always but sometimes) counterintuitively include non-operating items like foreign exchange (FX) gains/losses or gains/losses on asset sales. If the net impact is positive, operating income will be higher than EBIT and vice versa. If there aren’t any items like this to consider, EBIT and operating income will be the same. Other times, when these costs exist, they are incurred below the EBIT line (like in the income statement graphic I provided).

Net Income:

Finally, we deduct interest and tax from operating income to arrive at net income. This is often called the “bottom line,” as it’s at the very bottom of this important financial statement. For review, net income divided by overall share count leaves us with “earnings per share” which we use in our PEG ratio framework discussed in more detail last week. (LINK)

d. GAAP (Generally Accepted Accounting Principles) vs. Adjusted Results

Adjustments:

Firms will often report non-GAAP or adjusted results alongside GAAP results. When a company is reporting earnings vs. estimates, this is almost always adjusted earnings vs. adjusted estimates. Apple, Uber and Amazon are some notable exceptions. These adjustments help remove noise from temporary items and offer a better sense of run rate profitability. Still, some are more fair than others. To decide whether or not the adjustments are fair or unfair, we have to consider what they are. If a company is routinely deducting expensive entertainment events and corporate parties from its adjusted EBITDA figure, like in the case of previous darlings such as WeWork, then adjusted metrics are probably worthless. If a company like Teladoc is excluding rapid asset impairment from adjusted EBITDA figures seemingly every quarter… then adjusted metrics are probably worthless. Seeing a massive gap between putrid GAAP EBITDA, yet lofty adjusted EBITDA is a good signal for us to explore these add-backs in more detail. 

At the same time, adjustments to results are usually a productive way to offer a more reliable, smooth sense of what a normal quarter of profit should look like. Sometimes, there are weird, noisy items in quarters to consider. Maybe the tax rate was artificially high for a quarter or a company received taxation benefits that propped up net income. Maybe mark-to-market equity gains or losses, which count towards or against profit, were especially aggressive this quarter. Maybe a company like Visa was operating in Russia when war broke out, and had to abruptly exit that geography and write down assets. Maybe SoFi bought back convertible notes at a steep discount and pocketed a large, one-time profit. Maybe a founder compensation package vested in a specific quarter and temporarily held back results. Maybe a company like Broadcom purchased VMWare and had to complete several quarters of restructuring and realignment to properly integrate. You get the point. In all of these cases, adjusted results are more reliable for what to expect going forward than GAAP results… and in all of these cases, GAAP results are more noisy than adjusted disclosures.

I think it’s always a good practice to qualitatively evaluate the adjustments to see if they’re fair and how they compare to similar companies. If these adjustments don’t make sense to you, there’s a very good chance that they just don’t make sense, period. If you’re still reading this article, you are more than bright enough, more than informed enough and more than driven enough to reliably evaluate this yourself. If a firm is getting overzealous in add-backs, they are eliminating any kind of fair adjusted EBITDA comparison and calling into question their moral integrity.

Stock Comp Add-Back:

Stock comp is the most polarizing non-GAAP add-back of them all. Companies like PayPal have even eliminated comp exclusions from non-GAAP results due to loud investor criticism surrounding that add-back masking true, less compelling profitability. Candidly, I go back and forth on this add-back. I think high-growth companies should be using their common stock currency as a means to pay employees, align incentives and preserve cash. I think that makes a lot of sense. At the same time, I also think stock comp can be overused and abused. What are the signs of this abuse? Rapid diluted share count growth. For companies delivering material profit growth and not yet buying back shares, 0%-2% dilution is modest. 2%-3% is normal and anything durably above 3% is aggressive. After all, profit per share is what powers stock prices over the long term… if that “per share” part of the equation is rising rapidly, that diminishes the positive effect of company success.

If equity compensation is larger and growing faster for a similar peer, that may be an issue. And while that’s often the case, there are unique situations where rapid dilution is to be temporarily expected. For example, initial public offerings (IPOs) often lead to a couple years of options and other comp vesting to reward employees for the years of hard work. That leads to rapid yet fleeting dilution. In cases like Duolingo, they generated rapid share count for a couple of years, and have since seen dilution pace fall below 2% Y/Y. There are also long-term founder packages that occasionally vest and lead to a short-term spike in share count. That happened with The Trade Desk, as Jeff Green delivered on every company target and was paid accordingly. If there aren’t any one-off items like these, rapid, durable share growth does become more alarming. It hints at management teams being more interested in lining their own pockets than those of their shareholders.

Stock Comp Accounting:

In terms of accounting for stock comp, it’s actually a bit subjective. There are two popular ways to go about it. First, we can treat the expense purely as dilution. In this method, we use the non-GAAP figures that are provided by companies or manually do the stock comp exclusion ourselves. We add the stock comp charge back to income statement profit and simply track diluted share count growth and penalize the company as that grows. The other method is to remove the stock comp add-back from non-GAAP figures and to treat the line item as an income statement expense and dilution. This creates a lot more parity between GAAP and non-GAAP figures.

Critics of the first approach would say that free cash flow offers a sense of profitability without stock comp, so why use it in non-GAAP figures on the income statement? While that’s fair, there are still tangible differences between cash flow and income statement metrics to create two separate views of profitability. Critics of the second approach would say that the cost of stock comp is dilution, so it should not be treated as a dollar expense on the income statement. I go back & forth and don’t think either opinion will get you hurt. As long as we are penalizing companies for creating more shares, I think both approaches are fine. 

Under the first method, it is still highly important to track stock comp dollar growth, as that offers a forward-looking indicator for future dilution. Under the second method, it is still highly important to track dilution, as that is the eventual negative impact of equity compensation. The two ideas are inherently related and both are used by large cohorts of bright investors.

e. Quick Wrap-up Notes

I think we’re all familiar with profit multiples, but I think which numerator to use in deriving these multiples is routinely missed. There are two options for the numerator. Market cap is shares outstanding * stock price and enterprise value is market cap - cash + debt. Simply put, if profit is for shareholders and creditors, or before interest, we use enterprise value. If profit is only for shareholders, or after interest, we use market cap.

• Gross profit, EBITDA and EBIT use enterprise value.

• EBT and net income use market cap.

Return metrics are a different way of looking at business profitability. Rather than looking at profit in relation to revenue like with margins, or profit in relation to price like with valuation multiples, we look at profit in relation to total equity, assets or invested capital. It’s another way of looking at how efficient a firm is at turning their tools into profits.

• ROIC = Return on Invested Capital = EBIT*(1-tax rate)/(Debt + Equity). ROIC is a go-to metric to gauge capital allocation efficacy.

• ROE = Return on Equity = Net Income / Equity

• ROA = Return on Assets = Net Income / Total Assets

Lifetime Value (LTV) to Customer Acquisition Cost (CAC) and marketing payback periods tell us how efficient a company is with pursuing external growth. It’s another lens for viewing S&M costs vs. profits generated. Just like with demand pipeline and a few other metrics, these aren’t uniformly calculated. Both are more valuable when observing same-company trends vs. different firms most of the time. Some companies consider gross profit dollars to be lifetime value and marketing paybacks… Some companies only consider EBITDA to be lifetime value. Some companies include brand-level marketing in CAC expenses, while some exclusively consider performance-based marketing.

2. High Growth Gross Profit Comp Sheet

Important notes:

• I refrained from including the current gross margin for each company. Gross margin varies widely by sector, and these companies come from a wide array of sectors. 

• I did include current net income margin, as I think that margin is better for cross-sector comparisons. This is also provided to show you why some companies may get a larger gross profit premium than others. Firms are rewarded for a stronger ability to convert gross profit dollars to net income dollars.

• I don’t have gross profit estimates for SoFi two years from now. I decided to assume a flat gross margin for the next two years, despite the strong Y/Y margin expansion we’ve seen over the last few years. I like to lean conservative (especially for holdings) in the absence of data.

• Like with the EBIT comp sheets, this is simply one slice of data. It’s a very important slice, but not the be-all and end-all of valuation. Other slices would surely paint companies in different, yet related lights.

3. DraftKings (DKNG) – New Data

December data out of New York for DraftKings continues to underwhelm. Yesterday, DKNG’s hold rate came in at 6.1%, bringing its month-to-date hold rate down to 7.3% for December. Outcomes for the sector as a whole were quite poor, so DraftKings was not a negative outlier or anything like that. Notably, this DKNG result is materially below its guidance that assumed a 10% hold rate for the quarter, and lower hold directly and materially impacts revenue and profit vs. expectations. If New York looks like the rest of the nation, this data tells us that Q4 for DraftKings will likely disappoint vs. its guidance. The last three weeks of data have been below assumptions, and that’s likely what the stock has been reacting to this month.

I actually find this setup to be quite positive in terms of investment opportunity. I don’t really care all that much if it misses estimates next month because outcomes were worse than expected. Bad luck does not recur and will eventually level out. Even if the bad luck lasts months rather than weeks… mean reversion is inevitable. So? I want to take advantage when the bad luck is overly harsh and lean in. That’s why I aggressively boosted my stake earlier in the week, and I plan on doing the exact same thing if the stock keeps reacting negatively to these developments. That’s not a given and I am not predicting more sharp negative volatility for the stock. Other savvy investors are well aware of these same developments and those taking the long view likely have similar mindsets here. Furthermore, the miss could already be baked in, as again this is the 3rd straight week of bad data and the stock has already meaningfully pulled back. All I am saying is that I will take advantage of this volatility if it does continue.

What really matters here? I’m glad you asked. DraftKings continues to comfortably cut marketing spend, command a 30%+ industry market share and enjoy thriving new customer acquisition. It remains in rapid growth mode and rapid operating leverage mode. Good combo. This company ranks near the top of every 3rd-party vendor list in terms of interface and user experience, with the scale and balance sheet to invest when needed. It is explosively inflecting to positive free cash flow and is expected to generate $950M of it next year… with an $18 billion market cap. This is one of two kings within a secular growth story and trades at a lower growth multiple than pretty much any name in the coverage network. In a worst-case scenario, what if bad luck bucks every historical pattern and lasts through 2025? What if the $950 million in FCF next year isn’t actually attainable? Luckily, the margin of safety here is massive in my mind. Cut that forecast aggressively to $600 million and it still trades for 30x forward FCF with 200%+ Y/Y FCF growth expected. Fixating on and reacting to week-to-week outcomes and quarterly hits from those outcomes is missing the forest for the trees. It’s gambling instead of investing in the gambling vendor… and the house always wins.

I continue to view DraftKings and FanDuel as the only great places to invest in this category and still think DraftKings is the better investment of the two. Not only is it a pure-play for the most compelling U.S. market, but low-hanging fruit to devour and accelerate financial success is more abundant for DraftKings too. Specifically, FanDuel’s hold rate is around 12% vs. DKNG’s goal of 10% for 2024 (and 11% for 2025). It’s lower because DKNG’s parlay menu has been less complete, with proportion of bets via parlays therefore lower. Parlays have higher hold rates than other forms of bets and DKNG has quickly addressed this product gap. It is adamant that hold rate will slowly rise towards FanDuel’s but knows there will be hiccups in the road, like this month. I want to use those hiccups to my advantage. I think DKNG leadership’s opinion makes all the sense in the world and expect this month to be a blip on the radar (with more blips inevitably coming).

The only potentially notable negative from this data is DraftKings losing overall bet volume market share in recent months. Specifically in New York, that share has gone from 36.5% for the year as a whole, to 35% in October, 33% in November and 32.5% so far in December. When observing its proportion of market share between itself and FanDuel combined, a similar pattern plays out. This is also not concerning. DraftKings dominates with football and does worse vs. competition with basketball. The NBA has become a much larger portion of bet volumes since October, and its market share has fallen as a result of that. This is typical seasonality, and is not relevant to me unless weakness extends beyond that normal seasonality.

Monday may or may not be noisy. If it is, I might pounce. Max readers will be updated in real time as always.

4. Market Headlines

Disney’s Mufasa got off to a slow start in theaters, but has since gained some ground and recovered.

The Starbucks union strike is done for the moment, but it sounds like there could be more battles here in the near future. As Starbucks pointed out, it’s important to note that this only impacts 1%-3% of its U.S. stores, so the financial impact will be minimal. I’m still rooting for more drama here to add more to my stake.

Apple has joined in Alphabet’s antitrust fight over search engine dominance. Alphabet pays Apple somewhere around $20 annually to be the go-to default search engine across its devices.

Netflix hosted their first NFL games with zero streaming issues. This was great to see following issues during the Tyson/Paul fight event.

Regulators in Taiwan are attempting to block Uber’s purchase of Delivery Hero’s foodpanda unit in Taiwan.

5. Macro

Output Data:

• Core Durable Goods Orders M/M for November grew by -0.1% vs. 0.3% expected and 0.2% last month.

• Durable Goods Orders M/M for November grew by -1.1% vs. -0.3% expected and 0.8% last month.

Consumer & Employment Data:

• Conference Board Consumer Confidence for December was 104.7 vs. 112.9 expected and 112.8 last month.

• New Home Sales for November were 664,000 vs. 666,000 expected and 627,000 last month.

• Continuing Jobless Claims came in at 1.91M vs. 1.88M expected and 1.864M last report. 

• Initial Jobless Claims came in at 219,000 vs. 223,000 expected and 220,000 last report.