Slowing wage growth and sticky inflation could become a problem for U.S. consumers. Those at the lower end of the income spectrum are already struggling. As interest rates creep back towards the highs of the past year, mortgage rates are now solidly over 7%. Market volatility picked up over the past week and, for once, it was the Magnificent 7 leading the way down. The number of stocks outperforming the S&P 500 over the past year has risen in recent months. The Magnificent 7 was responsible for all of the S&P 500’s earnings growth in 2023 but 2024 may be a different story. India’s economy keeps getting stronger. China’s economic prospects are expected to improve. Automation still has a long way to go in the U.S.
1. Wages for the bottom half of wage earners are no longer growing faster than aggregate wages:
2. Credit card defaults have now clearly surpassed pre-pandemic levels:
3. Meaningful rate cuts from the Federal Reserve in 2024 now look unlikely:
Source: The Daily Shot 4/22/2024
4. We have been surprised by the resilience of the housing market, but that resilience seems unlikely to last in the face of sustained +7% mortgage rates:
Source: The Daily Shot 4/25/2024
5. Selling last week was concentrated in the Magnificent 7 send other AI related companies:
6. Despite the relatively small drawdown, the recent market move crushed investor sentiment:
Source: The Daily Shot 4/25/2024
7. Increasing market breadth is a positive for active managers:
8. Broad earnings growth should increase breadth in the market:
9. Manufacturing growth in India is accelerating:
Source: The Daily Shot 4/23/2024
10. Along with the services sector:
Source: The Daily Shot 4/23/2024
11. Economists are raising their 2024 growth forecasts for China’s economy:
Source: The Daily Shot 4/25/2024
12. It’s unlikely that these numbers are directly comparable between countries, but it seems likely that there’s still significant room for increased automation in the U.S.