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The Massive Drop in Consumer Spending

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Last Week’s Market Activity

With little excitement in the markets this week, many of the indices gave back some of their newfound gains.  This led to the Russell being down nearly 3%, the Nasdaq being down almost 2%, the S&P just barely negative on the week, and the Dow seeking out a small gain.  However, we’re bound to see some bigger moves this week, as we have some important economic data being released!

Macroeconomic Indicators

Last week was rather quiet in terms of economic indicators. However, there was a rather important release that seemed to fly below many people’s radar.  This release was the consumer credit release.  Analysts forecasted the increase in consumer credit balances for December to be somewhere around $26 Billion. However, the data came in at only $12 Billion.  While this may be a financially good thing for consumers, this isn’t a great sign for the economy.  This means that consumers are spending much less than anticipated, which could really show in both the Q4 2022 and Q1 2023 earnings releases.  

Upcoming Market Catalysts

This week, we have a rather busy week with regard to economic data releases, starting on Tuesday, with CPI data.  Year-over-year CPI is expected to be around 6.2%, compared to last month’s 6.5%.  While inflation has obviously been on the decline for months now, a small miss could send markets spiraling downwards, so it’s still important to pay attention to inflation data.

On Thursday, we’ll get some key retail sales data, showing us how the consumer is faring, and on Friday, we’ll get some important housing data.  The January building permit and housing starts numbers will be released, showing us how the housing market is holding up, given the sky-high cost of borrowing money.

Notable Earnings Releases

This week, earnings season continues, as we have some very important consumer companies reporting their earnings.

02/13 – SolarEdge Technologies (SEDG), Palantir Technologies (PLTR), Avis Budget Group (CAR)

02/14 – Coca-Cola Company (KO), Airbnb (ABNB), Marriott International (MAR), GlobalFoundries Inc. (GFS), Nu Holdings (NU), Restaurant Brands International (QSR)

02/15 – Cisco Systems (CSCO), Equinix (EQIX), Shopify (SHOP), Southern Copper Corporation (SCCO), The Kraft Heinz Company (KHC), Republic Services (RSG)

02/16 – Applied Materials (AMAT), Consolidated Edison (ED) Datadog (DDOG), DoorDash (DASH)

02/17 – Deer & Company (DE), AutoNation (AN)

As we previously mentioned, we have some very important consumer companies, like CO, KHC, RSG, and QSR reporting their earnings this week.  These companies will provide important commentary as to how the consumer is faring amongst these trying economic times.

We’ll also have some smaller tech companies reporting earnings, like ABNB, SHOP,  NU, and DDOG reporting earnings as well.  During these calls there’s a good chance we’ll hear about some layoffs, as tech companies cut back on employee costs to reach profitability.

We’ll also hear from some retail investor favorites, like SEDG, PLTR, and DASH reporting earnings this week.  These earnings will undoubtedly move retail investors portfolio balances in a major way, depending on how these companies performed in Q4.  

⚡ Watchlist ⚡

Monitoring the market conditions this week.

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