There is a discrepancy between sentiment indicators and consumer behavior, as retail sales and spending remain resilient despite plummeting confidence surveys.
Wall Street Horizon head of corporate event research Christine Short joins Market Domination host Josh Lipton to discuss the disconnect.
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We did have some some strategists last week, I want to get your thoughts on this, who were more kind of generally constructive on the market near term. And I think their point was, yes, a lot of spooky headlines are coming. But some of these strategists came on the show and said they felt like a lot of that bad news was priced in, in that we were you're about 10% off the top. And they were also looking at these sentiment gauges. They were looking at investor sentiment gauges and they were saying, wow, there's a lot of bearishness out there. To them, that was there was a potentially bullish contrarian indicator. What do you make of that?
It's funny with the sentiment indicators, because even retail sale, you know, the the UFM survey of consumers, and then you had the Conference Board's survey of consumer confidence. Both of those have been plummeting, right? It's like a very dark, scary story. But then when you look at retail sales, consumer spending, sure, a little lighter, but not dropping by the same amount. Um, consumers are inflation resistant. We've seen that, right? They'll continue to spend even as prices get higher. The one thing you have to look at with the consumer is how secure do they feel in their job, in their ability to keep their job, or if they were to lose it, how long would it take them to get another one. Um, we know consumer spending is two-thirds of GDP, so we really need the US consumer to continue to be out there spending, and for the most part, they do, which is why the US has such a great economy. But in this scenario, and we get jobs data on Friday, um, that's really the one thing I'm going to be looking at, because as you point out, we've seen this dichotomy between sentiment, but then what people are actually doing, and I agree with the strategists you're referring to where the base case for the markets and for the economy hasn't really changed entirely, even for some of these tech names, you know. They're still looking for pretty high profits when we get to earning season next week. Um, so the base case hasn't entirely changed, but it is the uncertainty, and that's why you're seeing investors react to that. You're seeing retail, uh, consumers react to that because they don't quite know what's happening over the next 12 months.
To your point, big jobs report on deck. We're all waiting for it.