Overall, it was a monster third-quarter for stocks, with the S&P 500 enjoying its best quarter since 4Q13.
I know the naysayers are trying to dismiss the rally and suggest the market has been sideways or too dumb to be afraid. Remember: the market was supposed to be lower, even crash now for a variety of reasons:
What I find most amazing isn’t the action in the stock market; it’s Main Street, which gives mixed signals on its opinions about President Trump approaching a level of economic optimism never seen in the country before.
Movin’ on Up
Well we're movin on up, To the east side.
To a deluxe apartment in the sky.
Movin on up
To the east side.
We finally got a piece of the pie.
-TV Theme Song, The Jeffersons
Taking a deeper look at the Michigan Consumer Sentiment Survey, it underscores the lower income brackets that finally feel like they are getting a piece of the action. That’s right. The lower one-third of income earners have seen the sharpest increase in enthusiasm after the top one-third peaked in February.
What does it mean?
This divergence across income subgroups has been observed in past economic cycles and indicates that the expansion has now benefitted nearly all population subgroups.
Consumers anticipated continued growth in the economy, an even lower unemployment rate and gains in their own finances during the year ahead,” Curtin said. “While some declines were recorded among higher income households, the outlook for consumer spending is still quite favorable.
-University of Michigan
Consumers are optimistic about buying conditions for homes, vehicles, and durable goods, mostly because of job certainty and income prospects.
There will be low prices ahead of anticipation of higher inflation and prices, especially in driving and in buying.
Americans are pumped about their own finance, ignoring all the noise and all the politics. Many are seeing opportunities they gave up on a long time ago. That’s great news for everyone.
Answering the Big Question
Coming into the quarter, the big question was whether the market could rally without leadership from a handful of Big Tech names. Well, investors found safety and opportunity in Health Care (HLV), the value in Industrials (XLI), and momentum in Consumer Discretionary (XLY) names.
*Only trading one week
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