It is a strong session thus far with rotation out of defensive safer sectors into lagging sectors, including Financials and Materials.  Energy is moving, as the big WTI breakout continues.  Industrials are responding to that solid bounce in manufacturing data and better than expected construction data.

Mixed Data

It is a great start to the month that sees the market shrugging off the weaker than expected retail sales numbers and rallying on other economic data.   The biggest miss came in retail sales, which seems counterintuitive based on strong wage and labor gains.

I’m not surprised, as I have stated for years, there is something about today’s consumer that harkens back to the Great Recession.  The aftermath is not unlike that of the Great Depression.  People are scarred. 

This newfound discipline seems to go against the consumerism America is known for, but people are spending, they are just not getting too far over their skies this time around.  Moreover, household debt in other areas like student debt is also serving as a buffer and keeping households in check.

That being said, I see yellow flags for building materials, but think the plunge in food at home (biggest dip since 2009) versus increase for bars and restaurants is a sign of confidence.

WWW.WSTREET.COM