There's been a 'decided tone shift' in markets, says SoFi's Liz Young

TL;DR

Market shows signs of correction, while consumer data points towards potential slowdown.

Transcript

20% FOR THE YEAR AND NOW DOWN 18 THAT'S A LOT OF WORK REVERSED IN ONE FELL SWOOP LET'S TALK MORE ABOUT THE BROADER MARKETS AND THE WEEK WE'VE HAD SO FAR WITH LIZ YOUNG, HEAD OF INVESTMENT STRATEGY AT SoFi IS THE S&P GOING TO GET INTO AN ACTUAL CORRECTION, DO YOU EXPECT THAT IT IS DOWN ABOUT 9.6% ON THE HIGHS NOW, LIZ >> WELL, I THINK THERE'S BEE... Read More

Key Insights

• 💦 The market has experienced a significant reversal, erasing months of work.
• ❓ Investors are currently more inclined to sell than buy.
• 💪 Despite a strong GDP growth number, there are concerns about overall weakness in the economy.
• 💯 The upcoming core PCE data is expected to align with Fed projections.
• 💳 Delinquencies in auto loans and credit cards indicate potential consumer pullbacks.
• 🍉 Weakening consumer strength would benefit the market in terms of supply and demand balance.
• ❓ However, the consumer slowdown should not be too significant to maintain a healthy economy.

Questions & Answers

Q: Is the S&P expected to enter a correction?

Yes, due to a shift in market sentiment and breaking through support levels, a correction is likely in the near future.

Q: What are the projections for core PCE?

The core PCE is expected to come in at 3.7%, which aligns with the Federal Reserve's projections for the end of the year.

Q: What data point could potentially turn things around?

If the consumer remains strong and shows no signs of pulling back on spending, it could change the current market trajectory.

Q: Why do some people want to see weakness in the consumer?

Some believe that a slowdown in consumer strength would alleviate concerns about interest rates rising too high and for a prolonged period.

Key Insights:

• The market has experienced a significant reversal, erasing months of work.
• Investors are currently more inclined to sell than buy.
• Despite a strong GDP growth number, there are concerns about overall weakness in the economy.
• The upcoming core PCE data is expected to align with Fed projections.
• Delinquencies in auto loans and credit cards indicate potential consumer pullbacks.
• Weakening consumer strength would benefit the market in terms of supply and demand balance.
• However, the consumer slowdown should not be too significant to maintain a healthy economy.
• The labor market plays a crucial role in supporting consumer spending.

Summary & Key Takeaways

• The S&P is likely to enter a correction territory as investors are looking for reasons to sell rather than buy.

• Despite a 4.9% GDP growth number and geopolitical factors, the market hasn't been weaker, surprising many.

• Consumer data, such as rising auto loan and credit card delinquencies, raises concerns about a potential pullback in spending.