What’s Going On With Consumers, When Will Bonds Behave Like Bonds, Don’t Bet Against Innovation
January 19, 2023 | FIRESIDE CHARTS
Consumers are becoming more upbeat, at odds with disappointing retail sales in December. More companies are mentioning job cuts on earnings calls. Slack in the labor market will put downward pressure on wage growth at a time when companies are also benefiting from falling input prices. Equity market declines haven’t been evenly distributed. When will bonds behave like bonds again? A major demographic change. Innovation helps to drive lower inflation.
1. Falling energy prices and slowing inflation are improving consumer sentiment:
Source: University of Michigan Survey of Consumers
2. Slower inflation is leading to lower inflation expectations, a positive development for the Federal Reserve:
Source: Daily Shot 1/17/2023
3. Nominal retail sales are falling as goods prices deflate while real retail sales are roughly in-line with the pre-pandemic trend:
Source: Daily Shot 1/19/2023
4. The technology sector is leading the way on job cuts, but other sectors have yet to follow:
Source: @M_McDonough
5. Wage growth is likely to slow in the coming year:
Source: Capital Economics
6. Producer prices have fallen in recent months, but consumer prices have yet to follow:
Source: Pantheon Macroeconomics
7. When opportunities are widely dispersed active managers should do well:
Source: Daily Shot 1/18/2023
8. The level of interest rates reflects the strength of the economy. Interest rates rose in 2022 among as the economy grew and unemployment remained low. We question whether rates can continue to rise if the economy deteriorates:
Source: HSBC
9. What will stagnant population growth in China mean for the global economy over the next decade?
Source: Reuters Read full article
10. Prices of durable goods declined for 20 years leading into the pandemic. Perhaps that trend has changed but we would not bet against future innovations:
Source: OECD Read full article
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.