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Weekly Market Recap: November 20, 2023

Weekly Market Recap: November 20, 2023

Posted November 20, 2023 at 10:30 am

J.P. Morgan Asset Management

The week in review

  • Headline CPI was unchanged m/m and rose 3.2% y/y in Oct.
  • Retail sales fell 0.1% m/m in Oct.
  • Industrial production declined 0.6% m/m in Oct.

The week ahead

  • FOMC minutes
  • Prelim. Markit PMIs

Thought of the Week

It’s not even Thanksgiving yet, but the holiday spending rush has already begun. The National Retail Federation is forecasting holiday spending growth of 3-4% from 2022, totaling between $957.3-$966.6 billion. This represents a normalization in holiday consumption growth to the pre-pandemic average of 3.6% y/y from 2010-19 after the last three years that were impacted by government stimulus. Higher prices and dwindling savings are putting pressure on consumers, but household balance sheets and debt service ratios remain healthy overall. However, holiday spending plans vary significantly between income groups. High-income households still have considerable savings, and those earning +$200K annually are expected to spend 22% more than last year according to Deloitte. Lower-income shoppers may have already depleted their savings but will likely hunt for discounts, use more “buy now, pay later” options and rely on credit to continue spending.

Despite expectations for solid holiday spending growth, consumer companies need to be strategic given building headwinds such as increased difficulty in obtaining credit and lower consumer confidence. Those offering discounts and adapting to changes in customer preferences will likely see strong earnings results in 4Q.

Looking ahead, consumption is likely to soften further following October’s retail sales decline of 0.1% m/m. More “normal” consumer spending activity in November and December could be favorable for markets and allow the Fed to cut rates earlier in 2024. While investors may want to wait for more data on how the economy is performing, slowly adding exposure to longer duration fixed income and equities is still prudent.

Holiday sales growth is set to return to its pre-pandemic pace
Chart of the week and Though of the week sources

Originally Posted November 20, 2023 – Weekly Market Recap

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Disclosure: J.P. Morgan Asset Management

Past performance does not guarantee future results.

Diversification does not guarantee investment returns and does not eliminate the risk of loss.

Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors.

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

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