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Market Snapshot 11/13/23- Be Defensive

Good Monday AM,

I hope you had a fantastic Veteran’s Day weekend.

Unbelievably, we are quickly heading into the holidays like a runaway train. I cannot believe that Thanksgiving is NEXT WEEK. With that we also find out how the economy is doing as retail spending comes clearly into focus this time of year. There is no economic data today to discuss but we do get a lot through the rest of the week. CPI tomorrow, PPI on Wednesday, Jobless claims, Industrial Production, and capacity Utilization on Thursday and then Husing starts/building permits on Friday. Sprinkle in a little Fed speak and it is a full week for sure.

Markets will be volatile and if have some slower growth data, I can see where markets may improve another .25%. The opposite is of course true as well so be defensive.

So, what are some signs that the economy may be slowing a bit? Well, here are a few metrics and unfortunately, they are backward looking so by the time the data shows up, we are already behind the curve (this is why I like the consumer sentiment data as it is real time and the consumer knows how they are doing and feeling..).

Low-wage workers were the labor market’s surprise winners of the past few years. As employers clamored to hire from a limited pool of workers, Americans in lower-paying industries gained leverage to obtain some of the largest pay raises and perks. Now, that leverage is weakening. More workers are seeking jobs, and the economy is feeling the impact of the Federal Reserve’s campaign to combat inflation. That has resulted in slower wage growth overall, but particularly at the lower end of the pay scale.

Retailers are noticing low-income consumers pull back, and economists expect this to cool an exceptionally strong streak of consumer spending, though they don’t see an outright bust.

bedroom with antler chandelier

How much will shoppers spend during the make-or-break holiday season?

Early signs—from the number of boxes loaded on railway cars to rising consumer debt—suggest that this year will be weaker than the past three. A dud of a holiday season would be disastrous for retailers. For economists, it would be an ominous signal about the direction of the economy. And for shoppers, forecasting offers a clue to when and how deeply stores will start slashing prices.

Please remain safe and stay healthy!