Dec 20, 2019

Axios Markets

This is our last edition for 2019. It's 970 words — or a quick 3.6-minute read.

  • Dion will be back to greet you in the new year. What's on your mind as we head into 2020? Drop me ( or Dion ( a line.

"We’re in a hell of a mess in every direction." — see who said it and why it matters at the bottom of the newsletter.

1 big thing: A record for out-of-store spending

Illustration: Aïda Amer/Axios

Americans are now spending nearly as much money remotely as they are in person.

Why it matters: It's a nod to the e-commerce boom, where corporate giants like Amazon and other businesses that bulked up online presence are cashing in like never before.

What's happening: For the first time, the value of purchases on debit and credit cards in 2018 nearly equaled that of in-person card spending, according to a new report from the Federal Reserve, which cites the latest data available.

What they're saying: The boom in remote buying is "driven by growing e-commerce and the use of cards for recurring bill payments," Fed researchers write.

  • And the upward trend paired with a strong consumer likely means 2019 was the first year that the value of remote card purchases surpassed in-person card payments.

The data doesn't include cash payments, which account for a bigger share of in-person transactions than cards do, per a separate Fed report.

Yes, but: While the gap in card spending in-person vs. remote has closed in dollar terms, the number of card transactions done in-person still far outpaces those done online.

By the numbers: 72% of purchases made with a card were done in-person, while just 28% of those transactions were made remotely.

  • While mobile wallets have made it easier to pay by card in stores, the number of in-person purchases has still steadily decreased from 84% of all transactions in 2012.
  • Those done online have steadily increased from 15% in 2012.

Between the lines: That means that spending at brick-and-mortar stores isn't completely dead, though people are spending less money there.

  • To appeal to all shopping tastes, store operators (retailers and beyond) are stretched between heavy investments in online platforms or delivery perks and investments in physical stores.
  • Take Walmart for instance, which is revamping 500 of its stores and opening 20 more, as part of an $11 billion investment plan. At the same time, it's planning to "aggressively scale" an in-home grocery delivery service.

The bottom line: Where consumers spend the bulk of their dollars is changing. But considering the vast number of card transactions still done in stores, American card spending habits haven't completely shifted to one side or the other yet.

Bonus: The convergence in card spending
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Data: The Federal Reserve; Chart: Andrew Witherspoon/Axios

From 2012 to 2018, the value of card payments done remotely jumped nearly four times more than the value of in-person card transactions.

2. A (so far) quiet end to 2019
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Data:; Chart: Axios Visuals

The S&P 500 rose half a percent on Thursday to top the 3,200 level for the first time ever on Thursday.

The big picture: A year that saw equity prices whipsawed by trade war uncertainty and recession fears is ending (so far) on a relatively quiet note.

  • One sign of calmness: Volatility in short-end U.S. treasuries has plummeted, after "rocketing higher in late May 2019 on Trumpian uncertainty," as Arbor Research & Trading's Ben Breitholtz points out.
  • "Waning uncertainty and investors disregarding the repo[market]-doomsayers has returned a sense of calm. If concern brews again, this will be one of the first place(s) it noticeably emerges."

What's next: Turning to 2020, the same threats that worried Wall Street analysts this time last year haven't completely vanished. A re-escalation of U.S.-China trade tensions is among the caveats that could knock bullish year-end S&P price targets off-course, analysts say.

What they're saying: "The rivalry between the US and China hasn't gone away. Investors will be alert for any sign that tensions are re-emerging, or either side is dissatisfied with the implementation of the Phase 1 agreement," UBS analysts wrote in a note on Thursday.

  • That firm predicts the S&P will end next year lower than where it's trading now, though most Wall Street analysts forecast more upside.

Go deeper: Asset managers urge caution in 2020

3. Catch up quick

Nike said tariffs trimmed the company's profit margins by 40 to 50 basis points in its most recent quarter. (Bloomberg)

Andrew Bailey, the head of the U.K.'s financial services regulator, will succeed Mark Carney as the governor of the Bank of England. (CNBC)

The Senate will vote on the USMCA next year after the House voted to pass the trade deal. (Axios)

What to watch: The final estimate of Q3 GDP is out at 8:30 am ET, while consumer confidence and inflation data come 90 minutes later.

4. Small rockets, big investments
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Data: Space Angels; Chart: Axios Visuals

Since 2009, more than $3 billion has been invested in companies building rockets to deliver small satellites to space, according to data provided to Axios by Space Angels.

  • In 2018, global investment in small launcher companies hit $823 million, with $451 million invested in these types of companies through Q3 of 2019, Axios' Miriam Kramer reports.

The intrigue: With dozens of companies aiming to break into the small launcher business in the coming years, experts are concerned that a bubble is forming in that part of the market.

  • Driving the news: Vector Space — one of the companies that was once considered at the forefront of this kind of launcher development — filed for bankruptcy last week.
  • Part of the growth in 2018 was spurred by investment in Vector as well as a number of other small launch providers that are now trying to get off the ground.

The bottom line: Vector’s troubles could signal that the small launcher bubble is bursting.

Keep reading and subscribe to Miriam's weekly space newsletter here.

5. The business stories that shaped 2019

A trader on the first trading day of 2019. Photo: Drew Angerer/Getty Images

I asked Axios reporters and editors who cover the business of technology, media, energy, transportation, health care and more about the stories and themes that mattered most in 2019.

Here's what they said:

My vote is for the CEO-consumer confidence schism and how it's helped (unshaken consumer spending) and hurt (sagging CapEx) the record-long economic expansion.

Sign up for other Axios newsletters here.

The answer: Paul Volcker said that in an interview with the New York Times last year. Read this story by Axios' Felix Salmon on why Volcker was one of the last heroic technocrats.

See you in 2020! 🥳