{"id":192161,"date":"2023-06-20T11:50:00","date_gmt":"2023-06-20T15:50:00","guid":{"rendered":"https:\/\/ibkrcampus.com\/?p=192161"},"modified":"2023-06-20T13:15:02","modified_gmt":"2023-06-20T17:15:02","slug":"running-out-of-cash","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.com\/campus\/traders-insight\/securities\/macro\/running-out-of-cash\/","title":{"rendered":"Running Out of Cash?"},"content":{"rendered":"\n

TLDR:<\/strong> <\/h2>\n\n\n\n

Ok, not entirely yet but the big cash cushion the US consumer built in the post-pandemic world is almost entirely gone. Gone. And if you\u2019re the US economy, this is akin to running low on jet fuel mid-air. Why?<\/p>\n\n\n\n

In his blog, John Authers highlights some recent research from the Federal Reserve of San Francisco<\/a> that basically argues the US consumer has burned through much of the pandemic savings. Still a bit left – $500BB or so – but it\u2019s definitely on track to run out by year end.<\/p>\n\n\n\n

\"Aggregate<\/figure>\n\n\n\n

Source: FRBSF Economic Letter<\/em><\/p>\n\n\n\n

Not as if the market really worried about that, though. Consumer discretionary stocks have outperformed their duller staples brethren by an astounding margin since the start of the year.<\/p>\n\n\n\n

\"discretionary<\/figure>\n\n\n\n

As Authers writes:<\/p>\n\n\n\n

Retail sales growth can be charitably called anemic. Orthodox surveys of consumer sentiment, such as the long-running polls run by the University of Michigan and by the Conference Board, agree that expectations have subsided since the start of the year. Consumers are still more hopeful than they were at the worst of 2022, but this doesn\u2019t look like material for a rally. Indeed, the Michigan survey shows expectations almost as low as in the aftermath of the Lehman bankruptcy<\/em>.<\/p>\n\n\n\n

So what\u2019s happening? What are markets seeing that the data is not showing (or what data are we missing)?<\/p>\n\n\n\n

\"wage<\/figure>\n\n\n\n

One big source of support is the labor market. Although it\u2019s slowed from the peak, the monthly job creation remains very robust and wage growth and wage growth far above inflation.<\/p>\n\n\n\n

Markets are implicitly betting inflation will come down faster than wage growth. Based on the recent data, they might be right.<\/p>\n\n\n\n

What stocks are doing well today?<\/h2>\n\n\n\n

This section is powered by Open AI connected to TOGGLE AI<\/em><\/p>\n\n\n\n

Thanks for all your feedback! This section is still paused, but an enhanced version is on the way (we promise)! <\/p>\n\n\n\n

Aggregated Leading Indicators!<\/h3>\n\n\n\n
\"Aggregated<\/figure>\n\n\n\n

Subscribe to Pro here<\/a> to receive our pre-market Leading Indicator newsletter and access all Leading Indicators online!<\/p>\n\n\n\n

Learn more about the Leading Indicators in the Learn Center<\/a>!<\/p>\n\n\n\n

Earnings Update: KB Home reports tomorrow<\/h3>\n\n\n\n
\"Earnings<\/figure>\n\n\n\n

High mortgage rates and persistent inflation could result in a softer demand environment for the homebuilding company. Click here<\/a> to observe how the stock could perform after earnings.<\/p>\n\n\n\n

Discover how other companies could react post earnings with the help of TOGGLE’s WhatIF Earnings tool<\/a>.<\/p>\n\n\n\n

Asset Spotlight: Big move up in Infosys<\/h3>\n\n\n\n
\"Asset<\/figure>\n\n\n\n

TOGGLE observed 10 similar occasions in the past where there was a big move up in Infosys stock and historically this led to a median increase in the stock price over the following 3M.<\/p>\n\n\n\n

Read full insight<\/a>!<\/p>\n\n\n\n