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What If The US Consumer Never Totally Breaks?
I'm always on the look out for disparities and contradictions in the macro narrative.
Not necessarily because they're exploitable for trades -- typically they aren't, or at least not in any kind of straightforward way -- but rather because they make for good paint-by-number articles on days when space needs filling.
The appearance of cognitive dissonance is easy to editorialize around, particularly when you can avail yourself of a chart or two and some analyst color. It's formulaic, but it wor
In order for falling mortage rates to impact the following must be true:
1. You have a mortgage
2. You have a variable mortgage, not fixed.
3. You plan to use the extra money that you save from falling mortgage rates, into buying goods and not paying off any other debt or saving.
Are there many such people, so many in fact that it would directly cause consumer cylicals to do better?
That’s not what he means. I’m not saying he’s right, but the thesis isn’t based on variable-rate mortgages.
What if ‘US customer’ as a single variable no longer makes sense?… haves / have nots as two variables?- Pew did a paper on in 2007- describing said bifurcation
quote: “Of equal importance, the number of Americans who see themselves among the “have-nots” of society has doubled over the past two decades, from 17% in 1988 to 34% today. In 1988, far more Americans said that, if they had to choose, they probably were among the “haves” (59%) than the “have-nots” (17%). Today, this gap is far narrower (45% “haves” vs. 34% “have-nots”).”
Source: https://www.pewresearch.org/politics/2007/09/13/a-nation-of-haves-and-havenots
John Edwards 2004 speech on Two Americas. True then, true now. What happened to John anyway?
After an initial strong showing in the run-up to the 2008 primaries, it came out in the National Enquirer that he had an affair with his videographer while his wife was dying from cancer. Turns out there are still some things awful enough to disqualify you from having a political career.
a FRED post shows assets held by ‘class’ in US https://fredblog.stlouisfed.org/2024/04/comparing-household-assets-across-the-wealth-distribution/
… most of you have seen snippets of it, but I find it hard to argue ‘1 America’ on any financial fact or perception (at least that I’ve seen – other than the US$ up until now) … economists models have work to do that is quite late imho
Did you read the Monthly Letter? If not, and you “like” those kinds of stats, give it a read: https://heisenbergreport.com/2024/08/30/40-acres/
Yes, Bless Marko’s heart…wait…who?
No, that’s a common misconception. JPMorgan house SPX call wasn’t Marko’s. It was Dubravko Lakos-Bujas.
The year is not over yet. Here in the Industrial Midwest the layoffs are happening fast. With more to come.
Let me take a gander. Industrial midwest layoffs are happening fast anecdotal on H. NFP Payroll will be hot. Haha.
From memory, at the start of every down cycle, there is some crouching into stocks catering to the higher-end consumer, because we make exactly this deduction: the haves have what it takes to keep spending.
It doesn’t usually work. When the economy rolls over, the haves see their portfolios falling, read scary news, see others losing jobs, and they pull back even if they don’t actually have to. On discretionary spending. And more of their spending is discretionary than our stocks can take.
There is also some snatching at stocks catering to the haves that start acting more like have-nots. Start clipping coupons, looking for overstock and seconds, rent instead of buy, etc. That can work but the company has to pick up more new business from the have-to-have-not customer than it loses from the have-not-to-have-even-less customer.
The odds are not good, trying to rifle-shot exactly the right consumer discretionary stock out of the doomed herd. Better to hide in defensives until the discretionary stocks get cheap.
If there’s no down cycle, then, sure, buy consumer discretionary. Jobs will decide that.
I’ve bought some discretionary names recently, but only ones that for hopefully fixable-not-terminal reasons are at 52 week or even post-pandemic lows.