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Personal Savings: An Unpolitical Sentiment Gauge
Yesterday’s Commentary discussed the vast divergence in the economic sentiment of Democrats versus Republicans. In the piece, we wrote: “Democrats think today’s economic outlook is worse than during the peak of Covid and the financial crisis of 2008. Sentiment is tricky to convert into an economic forecast. Sometimes, sentiment is bad, but consumers continue to […]
Apr 2, 2025
Liberation Day: A Bullish Scenario
Stocks are hitting the skids as April 2nd, or Liberation Day, quickly approaches. Investors are rightfully scared that tariffs announced on Liberation Day will be crippling to the economy and harm corporate earnings. Based on recent comments from Donald Trump, that is a logical concern. However, what if Trump is playing with emotions to make […]
Apr 1, 2025
Are Used Car Prices Set To Soar Again?
It wasn’t that long ago that used car prices were soaring as the production of new cars was crimped due to Covid-related supply line shortages. Since then, used car prices have stabilized as the supply lines have healed. However, like many goods, prices haven’t retreated to pre-pandemic levels. As we wrote in yesterday’s Commentary, the […]
Mar 31, 2025
Auto Tariffs Impact Automakers Differently
Despite what some may think, the impact of the new 25% auto tariffs will not necessarily benefit all US auto companies to the detriment of their foreign counterparts. For example, as we share below courtesy of Bank of America, Ford produces about 80% of their US-sold cars in the US. However, GM and Stellantis, the […]
Mar 28, 2025
The Wealth Dissipation Effect
Ben Bernanke popularized the wealth effect theory during the financial crisis in 2008. In his words, “higher stock prices will boost consumer wealth and help increase confidence, which can also spur spending.” Moreover, he argued this would create a “virtuous circle” of increased spending, higher incomes, and further economic growth. Since then, the Fed has […]
Mar 27, 2025
The Market Drawdown Is Perfectly Normal
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 […]
Mar 26, 2025
UM Inflation Expectations May Oddly Signal Disinflation
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 […]
Mar 25, 2025
The Key to Lower Inflation May Start with Stock Prices
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 […]
Mar 24, 2025
Retail Sales Are Better Than Advertised
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, […]
Mar 21, 2025
The FOMC Shifts To A Dovish Tone
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 […]
Mar 20, 2025
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