Okay, let's dissect this Black Friday narrative. The headlines are screaming about robust consumer spending, but the market's reaction is… well, muted. Red, actually. The S&P 500 rose a measly 0.1% on Tuesday, hardly a victory parade for retailers. Dow up 0.2%. Nasdaq, a bit better at 0.5%. Is this the economic salvation we were promised?
Black Friday Buzz vs. Wall Street Blues: A Consumer Disconnect?
The Disconnect: Spending vs. Sentiment Here's the core discrepancy: we're told Americans splurged over Black Friday and Cyber Monday, yet the stock market – usually a forward-looking indicator – is acting like it expects a hangover. Signet Jewelers, a bellwether for discretionary spending, is forecasting weaker-than-expected revenue for the holiday season. That’s a pretty clear signal (or at least, as clear as you get in the opaque world of retail forecasting). And then there's Procter & Gamble. Their CFO is calling the U.S. consumer landscape "volatile." Volatile isn't exactly the word you want to hear when you're banking on holiday cheer driving profits. P&G shares dipped 2.3%. The news reports are highlighting that lower-income households are struggling with inflation, while wealthier households are doing just fine thanks to a near-record stock market. So, are we seeing a bifurcated economy, where the top 20% are keeping the lights on while the rest are tightening their belts? It certainly looks that way. The question is, how long can that last? And, more importantly, how much of that spending was fueled by credit card debt that's about to come due?Bitcoin and Bonds: A False Sense of Calm?
Bond Yields and Bitcoin: The Real Story? While everyone's focused on shopping, let's peek behind the curtain at the bond market. Treasury yields were calming down after a jump, with the 10-year holding at 4.09%. Bitcoin, after a tumble, bounced back above $91,000. This suggests a broader risk-off sentiment might be at play. Investors were perhaps spooked by the Bank of Japan hinting at interest rate hikes. As Wall Street holds steadier as bond yields and bitcoin stabilize reports, bond yields and bitcoin are stabilizing. (Parenthetical clarification: Higher bond yields often mean lower prices for "expensive" investments, which can include stocks.) Several crypto-related companies bounced back on Tuesday. Strategy climbed 6.9%. Coinbase Global gained 3.3%, and Robinhood Markets rose 3.6%. The Fed has already cut its overnight interest rate twice this year, hoping to shore up the job market. But lower rates can fan inflation higher, and inflation has stubbornly remained above the Fed’s 2% target. Is the Fed really going to cut rates again when inflation is still a problem? It seems unlikely, but stranger things have happened. I've looked at hundreds of economic reports, and this feels like a classic "good news is bad news" scenario. Strong spending might just delay the inevitable recession, giving the Fed less room to maneuver. The U.S. government's earlier shutdown delayed reports on the job market and other areas of the economy. Vanguard said its data suggest the U.S. labor market “remains stable but is still soft compared with last year.” Overall hiring numbers are slower on a month-to-month basis. But fewer workers are going after job openings because of weaker immigration and an uptick in retirements. A Sugar Rush, Not a Sustained Recovery So, did Black Friday save the market? No. It was a temporary jolt, a sugar rush of consumerism that's masking deeper economic anxieties. The market's tepid response is the tell. It's like a patient who gets a shot of adrenaline – they look better for a few hours, but the underlying illness is still there. The real test will come in the new year when those credit card bills arrive and the holiday cheer fades. Will consumers continue to spend at the same rate, or will we see a significant pullback? The data isn't conclusive, but my gut tells me it's the latter. The Illusion of Prosperity