One quick highlight for Friday afternoon ….
That high ticket discretionary consumption is sensitive to asset price volatility should be intuitive. And because the top quintile of households (by income) account for ~40% of consumer spending, confidence and consumption trends at the high end are more than just a cutesy talking point.
This morning’s PCE data offers a convenient and conspicuous case study in that relationship with luxury goods consumption cratering to -3.2% Y/Y, marking the slowest pace of spending growth since 4Q11.
We’ll get our first read on whether the Jan/Feb asset price reflation reversed the high end and broader consumption retrenchment with February Retail Sales on Monday, but with the drip of global Quad 4 data holding steady, Consumer Confidence continuing to leak lower and profit recession risk rising as the domestic macro cycle now traverses the back side of the growth curve, a repeat of the ‘American Exceptionalism’ that characterized 2018 looks increasingly improbable.
We’ll be profiling our outlook for domestic and global growth and detailing the cross-asset implications on our 2Q19 Macro Themes call on Thursday.
…. re-binge watch some GOT ahead of season 8, revel in the Sox claiming top spot in the AL East, hope the China PMI data is less than terrible. … unless bad is good, which it has been, in a way, maybe.
Have a great weekend.
Christian B. Drake