Five interesting things that Hodges Capital research analysts discovered this week...

#1 ATTACK OF THE TOOTHBRUSHES: Common household items these days are now “smart devices” connected to the Internet, such as baby monitors, ovens, refrigerators, and doorbells, to name a few. Recently, a surprising story about 3 million hacked toothbrushes engaging in a Denial-of-Service attack targeting a Swiss company went viral. Is this for real? Swiss newspaper Aargauer Zeitung initially reported this as an actual incident, but something was lost in translation as cyber security company Fortinet has since clarified to The Independent that it was a hypothetical scenario. This still serves as a warning that every device connected to the Internet can potentially be misused in an attack or the intended target.

#2 HITTING A CHINA WALL: Chinese January PPI (Producer Price Index) was down  2.5% over last year, the 16th consecutive decline. The CPI (Consumer Price Index) was down 0.8%, the deepest decline since 2009. This is deflation, a concerning economic situation where prices fall. In the case of China, debt, a shrinking population, and real estate concerns have led to weak demand and sluggish exports. Kyle Bass, founder of Hayman Capital, told CNBC this week that China is facing a crisis like the 2008 financial crash “on steroids.”  

#3 BET ON TAYLOR SWIFT: The Superbowl has something of interest for everyone, whether it is football, commercials, or increasingly online betting. GeoComply, a global leader in advanced anti-fraud and geolocation compliance technologies for the last several years, has tracked geolocation checks during the Super Bowl. This is built into the betting apps to ensure a bet is placed in a state that has legalized such activity. The results: 1) Geo-location checks were up 23% over last year. 2) She wore black. 3) She appeared on screen more than six times. 4) The coin toss landed as heads.

#4 TAX REFUND DISAPPOINTMENT: The 2024 tax season started on January 29th and early results are in. So far 13.9 million returns have been processed and in total $2.6 billion refunds have been issued, resulting in an average refund of $1,295. That is down 29% from last year. Lower tax refunds may have negative implications for cash strapped consumers in an inflationary environment.

#5 RUNNING A 5K: The S&P 500 index sprinted to a milestone level of 5000 last Friday, a record level. The market rally has been narrowing, led by a handful of stocks, as reflected in less than 10% of the stocks in the index hitting a new 52-week high.

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