=== MARKET IMPLICATIONS === The ongoing dissaving trend suggests continued resilience in consumer spending, acting as a significant tailwind for consumer-facing sectors, particularly those less reliant on immediate income growth and more on wealth effects. This environment supports a "jobless expansion," implying that equity markets could continue to perform well, as asset values themselves are driving real economic activity. Inflation, noted as "a little too high," may remain sticky due to sustained demand. Sectors benefiting from discretionary spending, supported by high household net worth, are likely to outperform. The noted weakness in auto sales in January, potentially weather-related, warrants monitoring but doesn't necessarily signal a broad consumer slowdown.
| Ticker | Direction | Speaker | Thesis | Time |
|---|---|---|---|---|
| LONG |
Bob Elliott
Substack author, Nonconsensus |
"real growth in the economy continues to power on, mostly driven by pretty good household consumption" due to "households are drawing down their savings to keep their spending going." This creates a "jobless expansion favoring companies fed by an ongoing flow of dissaving." With households having "room to save less given all the wealth built up," and the general consumer "chugging along" (outside of Jan autos), companies catering to discretionary spending (excluding the noted weak auto sector) should see sustained demand. Long consumer discretionary stocks/ETFs (excluding auto manufacturers/dealers) to capitalize on robust consumer spending fueled by dissaving and wealth effects, despite weak income growth. A significant decline in asset markets could reduce household net worth, curtailing dissaving capacity. A sharper-than-expected economic slowdown or a broad increase in unemployment could also undermine consumer confidence and spending. | — | |
| LONG |
Bob Elliott
Substack author, Nonconsensus |
"It seems the asset markets are driving the real economy these days, not the other way around." This leads to a "jobless expansion favoring companies fed by an ongoing flow of dissaving." If asset markets are driving the real economy, continued strength in asset values (equities) can create a positive feedback loop, encouraging further dissaving and consumption. This environment is generally supportive of broad market indices and growth-oriented companies that benefit from sustained demand and wealth effects. Long broad market ETFs (like SPY) or growth-focused ETFs (like QQQ) to benefit from the positive feedback loop where asset markets drive the real economy, supported by ongoing household dissaving. A significant correction in equity markets would directly undermine the "asset markets driving the real economy" thesis. Unexpectedly aggressive Fed tightening due to persistent inflation could also dampen market sentiment. | — | |
| WATCH |
Bob Elliott
Substack author, Nonconsensus |
"car sales were a notable weak spot in Jan (aligning with the JPM data above)." "most of the weakness we have seen Jan is related to a very weak autos print." The author suggests "relatively extreme cold, snow played an important role." The auto sector showed specific weakness in January, potentially due to temporary factors like weather. While the broader consumer is strong, this specific segment experienced a notable slowdown. Watch the auto sector for signs of recovery in February/March, as the January weakness might be transient and weather-related rather than indicative of a fundamental shift in consumer demand for vehicles. A sustained rebound would negate the short-term negative signal. If the January auto weakness proves to be more fundamental (e.g., affordability issues, saturation) rather than temporary, the sector could face continued headwinds. | — |