Charts to Chew On: A Jubilant June.
Contextualizing monthly consumer sentiment and market momentum. Data as of June 30, 2023.
For those who are newer here, I publish monthly readouts on the state of the markets and the corresponding implications for the US consumer. Read on for more!
Perhaps getting their boogie on in preparation for the 4th like the rest of us, stocks jumped yet again in June. While the S&P’s 6.5% gain marked the best monthly performance since October, the Nasdaq showed its own impressive 6.6% advance, as both indices scored a fourth consecutive month of positive performance.
While almost exuberant sentiment from retail and institutional investors alike could indicate that a lot of the near term market upside is already priced in, the month delivered incrementally constructive data points that did further validate the case for a US soft landing. While June’s CPI report underscored inflation’s ongoing decline down to the lowest headline rate since March 2021, Q1’s upwardly revised GDP and household spending reports signaled both a resilient economy and US consumer. Additionally, with early indications of stabilization in the real estate market alleviating some household concerns and supporting consumer confidence’s climb to 17-month highs, the economy by many measures is projecting an image of not too hot, not too cold – perhaps, in fact, just right.
However, despite the Goldilocks-like stories being told stateside, worries continue to mount for many of our key trading partners internationally like the UK, EU, and China, among others, who are all grappling with a combination of persistent inflation and / or slowing economic growth. With the World Bank slashing its overall global growth forecasts for the year by over 40%, Analysts increasingly fear that we are precariously close to falling into a recession at the global level if recent trends continue.
With both a pivotal Fed meeting and Q2 earnings on the horizon in the back half of the month, July is poised to be catalyst rich and critical in cementing the market narrative for the back half of the year. With hawkish Fed speak now indicating what looks like an 84% probability (as of June 30th) that the Fed will indeed raise rates again at their upcoming July meeting, investors are likely to remain on the edge of their seats in the coming weeks. However, as we all anxiously await the data dumps from the events ahead, please enjoy a selection of breadcrumbs below that are informing my own mental model on how the macro backdrop might unfold from here.
Note: Data reflective of June 30, 2023. This does not constitute investment advice.
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