The final March reading of the University of Michigan Consumer Sentiment Index was 57.0, compared to an expectation of 57.9. It's a 12% decline from February. Catalysts Anchor Madison Mills and The Basenese Group founder & chief strategist Lou Basenese break down the data.
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Umish sentiment falling to 57 yesterday. 57.9. So not too much of a drop there. Interesting to look at the one-year inflation expectations continuing to tick up hitting 5%, and then the 10-year inflation expectations, 5 to 10 year, hitting 4.1%, that is above the estimate, which was 3.9%. Again, expected change in medium prices. We saw this last month as well, hitting a record high, the highest level since February of 1993. So inflation expectations continuing to move to the upside. Lou, I'm I'm so curious what you think about this, because we've been talking about the soft data versus the hard data. This is another example of the consumer vibes just not being so good.
Yeah, the sentiment has soured like spoiled milk very quickly, right? I mean, in the last three months, and you're seeing it across the board. I mean, it doesn't matter which sentiment reading you look at, whether it's on the just consumer side, or on the investor side. Yeah. I think we have to see it show up in the hard data first. I mean, Torsten Slåk at Apollo had a note out earlier today, like, the expectation is, with all this soft data weakening, you'd see it somewhere in the hard data, but we just haven't yet. I mean, the only indication we've gotten is in layoffs. But that could just be a volatility spike and, you know, kind of beginning of the year reset in staffing. Until we see a real problem in the hard data, I don't think there's any concerns or expectation of recession, which everyone seems to be freaking out about. I mean, I think they think it's much closer than it is, but the data doesn't bear that out. So I, again, as a as an investor, I get excited when everyone gets negative, because it usually means stock prices are coming down. They're terrible market and market timing. If you look at the conference board sentiment, you know, the the expectations for stock prices plummeted the most in three months since November of 2022. That was a bottom. That was a time to buy, so I get excited at these times when everyone else is starting to get worried.
And and where does that excitement leave you? Where are you finding most opportunity right now?
Yeah, so it's funny. I I've broadened out. I'm a tech guy by nature, but also, I'm not going to ignore value. And Europe and China has now been showing value, right? Like I even though the mag 7 came down from called a peak of like 38 times forward earnings down to like 25, 26, it's hard to say no to Europe at 14, 15 times earnings, or Alibaba at, you know, 14, 15 times earnings. So branching out, I'll be the first to admit, I don't have an edge in international markets with individual stocks most times. So I'll go the ETF route there. Yeah. And then looking in the US is really what are the companies that are delivering earnings growth consistently, quarter in, quarter out, and raising guidance, because we know fundamentally, whatever's going on in the market in the world, as long as companies keep growing earnings, growing sales and raising guidance, their stock price will eventually keep moving higher. Yeah. Um, so that means getting out of a lot of the momentum trades, right? Like I don't, you know, it's just it's that phase of this bull market has ended where you could just set it, forget it, buy the mag 7, buy whatever sectors rallying, and hope that you're going to make double digit gains.