It was a mixed morning of economic data and there is a compelling reaction across the market.

The PCE release came in as expected and asset classes began to move according to the script.

Then, the Chicago PMI release came in much hotter than expected. After a disastrous string of missing consensus in eight of the last nine months, there was a monster spike.

The 47.4 print was substantially higher than the consensus of 39.7, and 35.4 in May (a four-year low).

Suddenly, the ten-year yield reversed and began to edge higher, and the equity rally also began to fade.

I think I’m missing something.

Meanwhile, the Atlanta Fed lowered its Q2 2024 GDP estimate to 2.2% from 2.7%, driven by a sharp reduction in PCE to 1.8 from 2.5.

I suspect the focus is moving to a consumer that is slowing down and becoming defensive.  Savings moved to 3.9%, after bottoming in March at 3.5%.

The Consumer is Tapped Out

I continue to say the consumer is tapped out.  Sure, they have cash to buy stuff, but the splurging is over.  Nike (NKE) is getting crushed today -19.0%. 

While Nike (NKE) bills itself as a “growth” company, sales in North America were down during the quarter.

The market is grappling with the narrative today.  Its harder to say if the consumer and economy are strong, or if the Fed will step up to the plate any time soon.