Given the fear as represented in investor surveys and various sentiment gauges a couple of weeks ago, one would think the recent market drawdown was significant. As a testimony to the concern, investor sentiment hit bearish levels that had only been witnessed during significantly larger market drawdowns, not the relatively measly 6.5% decline from the start […]
The graph below, courtesy of Jeff Weniger, shows that since 1990, spikes in the University of Michigan (UM) consumer inflation expectation index to around 5% have preceded inflation declines. As he highlights, the UM inflation expectations gauge hit 4.9% in the latest survey. The exceptions to the rule were in 2020 and 2021, which occurred […]
The key to lower inflation may start with the stock market and feed into the economy rather than vice versa. The wealth effect describes the behavioral phenomenon where individuals’ perceived wealth changes impact their spending decisions. People tend to feel wealthier when their asset prices rise, even if their income remains unchanged, leading to higher […]
Within the headline retail sales figure is a lesser-followed data point called the retail sales control group. Following the trend of both figures is important because although the headline figure receives more attention, the control group is the measure that feeds into the GDP calculation. While retail sales increased by only 0.2% MoM on Monday, […]
As the market widely expected, the FOMC left the Fed Funds rate unchanged. However, the statement summarizing the meeting now includes an economic growth warning- “uncertainty around the economic outlook has increased.” Moreover, they are reducing the amount of monthly QT. The roll-off of Treasury securities will fall to only $5 billion monthly, down from […]
The old saying that the bark is worse than the bite is a good description of the current state of the stock market and investors’ sentiment. The following quote from a recent Commentary and our most recent article (summarized and linked below) point to the unusually poor sentiment. The AAII retail investor survey is now […]
In our Commentary last week, we noted that Delta shares were down over ten percent due to their weak economic outlook. Per our Commentary- “Delta’s CEO offered similar caution: The outlook has been impacted by the recent reduction in consumer and corporate confidence caused by increased macro uncertainty, driving softness in Domestic demand. He also […]
As we have mentioned numerous times, consumer sentiment greatly impacts economic activity. Accordingly, the price activity of particular goods can have an outsized influence on consumer inflation views. For example, orange juice and egg prices have been leading some consumers to have flashbacks of the recent high inflation. Based on the recent price trends of […]
In hindsight, markets are easy to assess, yet extremely challenging to forecast. For example, as we will show, it’s undeniable that value, particularly large-cap value stocks, have been in vogue during the recent decline, while growth is being kicked to the curb. This rotation from growth to value is an example of how investors rotate […]