11|16|2021

Consumer Powered Boom? | November 12, 2021

AUTHOR: Jason J. Roque, MS, CFP®, APMA®, AWMA®
TITLE:       Investment Adviser Rep – CCO
TAGS:   S&P 500, FRB, CPI, Rates, Sentiment

Markets gained on the week. As earnings slow down, will consumers be able to power a 4th quarter boom?

Monday

Markets opened the week with a sigh as the S&P 500 rose 0.09% with not a whole lot of momentum. This reaction lowered VIX understandably. Forward looking volatility is becoming fairly low for the next month.

Tuesday

The Markets decided to turn on Tuesday, ending a long streak of daily gains. The S&P 500 shed 0.4% on the day. Producer Price figures weighed on investors as it showed that there was still inflationary pressure on companies. The fear being that inflation will be passed through to the consumer in the near future.

Wednesday

Initial jobless claims impressed on Wednesday, coming in at 267K, again the lowest mark since the start of the pandemic. However, this was not enough to prevent a continued slide on the markets. The S&P 500 shed an additional 0.8% on the day as the Consumer Price Index (CPI) rose more than expected. It came in at 6.3% YoY for October.

Thursday

The S&P 500 was fairly unchanged on the day; however, safe haven asset classes all caught a bid on the day (minus bonds). Bond markets were closed in observance of the Veteran’s Day holiday.

Friday

Markets surged into the close of the week. The S&P 500 gained 0.72% on the day and a 1.68% gain for the week! The JOLT’s job openings came in strong again at over 10M openings. This, coupled with higher job adds, is encouraging for where the job market will be heading. Impressively, we are already sub 5% unemployment, so the slack in the economy should start to tighten.

Conclusion

On Friday, consumer sentiment was projected to come in low for November. With retail sales reporting this week, it will be interesting to see if the divergence between the two continues. Although consumers say they are not bullish on the economy, actual spending would suggest otherwise. Retail sales have been strong the last few months. This could be pre-emptive shopping with light inventory expectations for the holidays; however, I think it’s continued strong consumer spending. The holiday spend will likely be large after the quiet 2020 holiday season.

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