Poll of the Day Recap: 55% Voted YES U.S. Consumers Maxed Out

Takeaway: 55% voted YES; 45% voted NO.

In today’s Morning Newsletter, U.S. macro analyst Christian Drake pointed out that the spike in credit card debt in April occurred alongside very weak consumer spending and housing data – weakness that extended into May. “Tapping credit to purchase everyday essentials because cost inflation is running at multiples of income growth,” he wrote, “is not reflective of a resurgent consumer driving an accelerating, sustainable consumption recovery.”

 

It is important to note that this is only one preliminary data point that is volatile and subject to significant revision, we should have a better sense of the legitimacy of it when the card companies report May data next week.

 

We wanted to know what you think. Today’s poll asked: Are U.S. consumers maxed out?

 

Poll of the Day Recap: 55% Voted YES U.S. Consumers Maxed Out - cut 

 

At the time of this post, 55% voted YES; 45% voted NO.

 

Voters who believe YES, U.S. consumers are maxed out, had this to say:

  • Most investors don't understand how to interpret credit card debt. Counter intuitively, it's procyclical and tends to be a reflection of confidence, i.e., debt grows as confidence is rising. Not the other way around. Yes, there are obviously some who use it as a stop gap for essentials or unexpected crises, unfortunately. But most of the actual balance growth comes from affluent people who use it for projects, vacations, etc. I voted yes on this question not because I think credit card is signaling consumers being tapped out, but because the youngest cohort of the economy is tapped out for an entirely different reason, student loans. That's the real elephant in the room…
  • I'm as good a proxy as any consumer, as I thoroughly enjoy consuming. Just dropped $7500 in moving expenses and definitely feeling it. $3500 broker fee for 15 mins of work on their end. Brutal. I might actually have to pare back my Bud Light consumption this weekend! 
  • Yes, but only because they're undisciplined in adjusting spending habits; cost of groceries are up, so where else can they save; most don't want to give anything up, and that's where it starts to fall apart.

Those who voted NO reasoned:

  • We are not there yet. Certainly some are maxed out but those who are probably find themselves in that situation more often than not regardless of economic conditions. Until there is a real downturn in the economy it is doubtful that we will reach the debt limits of the recent past.
  • There's nothing to indicate this is the case; if and when there's a serious market correction, and people start losing jobs, and if the cost of various goods continue to go up, then people will get themselves in trouble, but we're not there yet.
  • Coupled with improving labor market conditions this is a sign of confidence that a fundamental improvement is occurring #rolltide

 

 


People's Bank of China Spins China’s Bad-Loan Data

PBoC Deputy Governor Yi says China's non-performing loan problem has “pretty much stabilized." "Yi is spinning. China’s bad-debt problem remains serious," write Benn Steil and Emma Smith, Council on Foreign Relations.

read more

UnderArmour: 'I Am Much More Bearish Than I Was 3 Hours Ago'

“The consumer has a short memory.” Yes, Plank actually said this," writes Hedgeye Retail analyst Brian McGough. "Last time I heard such arrogance was Ron Johnson."

read more

Buffalo Wild Wings: Complacency & Lack of Leadership (by Howard Penney)

"Buffalo Wild Wings has been plagued by complacency and a continued lack of adequate leadership," writes Hedgeye Restaurants analyst Howard Penney.

read more

Todd Jordan on Las Vegas Sands Earnings

"The quarter actually beat lowered expectations. Overall, the mass segment performed well although base mass lagging is a concern," writes Hedgeye Gaming, Lodging & Leisure analyst Todd Jordan on Las Vegas Sands.

read more

An Update on Defense Spending by Lt. Gen Emo Gardner

"Congress' FY17 omnibus appropriation will fully fund the Pentagon's original budget request plus $15B of its $30B supplemental request," writes Hedgeye Potomac Defense Policy analyst Lt. Gen Emerson "Emo" Gardner USMC Ret.

read more

Got Process? Zero Hedge Sells Fear, Not Truth

Fear sells. Always has. Look no further than Zero Hedge.

read more

REPLAY: Review of $EXAS Earnings Call (A Hedgeye Best Idea Long)

Our Healthcare Team made a monster call to be long EXAS - hear their updated thoughts.

read more

Capital Brief: 5 Things to Watch Right Now In Washington

Here's a quick look at some key issues investors should keep an eye on from Hedgeye's JT Taylor and our team of Washington Policy analysts in D.C.

read more

Premium insight

[UNLOCKED] Today's Daily Trading Ranges

“If I could only have one thing of the many things we have it would be my daily ranges." Hedgeye CEO Keith McCullough said recently.

read more

We'll Say It Again: Leave Your Politics Out of Your Portfolio

If your politics dictates your portfolio positioning, the Democrats and #NeverTrump crowd out there have had a hell of a week.

read more

Cartoon of the Day: 'Biggest Tax Cut Ever'

President Donald Trump's economic team unveiled what he called last week, "the biggest tax cut we’ve ever had.” Before you get too excited about that hang on a sec. "Trump Tax Reform ain’t gettin’ done anytime soon," Hedgeye CEO Keith McCullough wrote in today's Early Look.

read more

Neurofinance: The Psychology Behind When To Sell A Bull Market

"Most momentum investors stay invested too long, under-reacting and holding tight after truly bad news finally arrives to break the trend," writes MarketPsych's Richard Peterson.

read more