Feeling of the investor in the face of consumer’s feeling

Good day. Vladimir Putin said Donald Trump who had no problem with the presence of peace maintenance troops in Ukraine after the end of the war in that country. Or so said Trump yesterday. This is, in the words of an analyst, a news of “bombs” that significantly changes the probabilities of peace, if it is true. But nobody is sure if Putin really said it, and if he said it, he said it seriously. Then Trump’s comments did not even make the front pages. In 2025, in politics as in markets, nobody knows what to believe. Send us an email something you are sure: Robert.armstrong@ft.com and aiden.reiter@ft.com.

Consumer confidence in the face of investor confidence

Yesterday We talked about recent soft economic readings that coincided with a drop in consumer feelings of the University of Michigan. An aspect of this disappointing data package was that it arrived at a time when the trusted measures of mostly investors were very high. Here are Michigan’s numbers again:

Contrast with that with the CITI Levkovich index, a compound of indicators ranging from margin debt levels to the Put/Call relationship, which measures investors’ vibrations on a “panic” to “euphoria” scale. The index fell a little last week, but it is still in the euphoria range:

The Bofa Investor Feelings Index, which combines growth expectations with equity and cash assignments, also came out a bit, but it is also quite optimistic:

The retail investor survey of the American Association of Individual Investors is different. Like the consumer’s feelings survey, it is fine outside 2024:

At first glance, the optimism of institutional investors combined with the weakening of the feeling of consumers and some insults of retail investors may seem a bad combination. This is especially true if you think, as some market observers do, that the feeling of the consumer is a leading market indicator.

The relationship between the two feelings about history is quite messy but sometimes suggestive. Here is the Michigan survey drawn against the Levkovich index:

Note how before the 2008 crisis, the feeling of the consumer began to stagger, while the institutional feeling of investors continued to increase happily before crashing. And how consumer vibrations tracked market performance much better than investors from 2013 to 2020.

But Drew Petit in Citi argues that consumers’s indicators, such as Michigan’s survey, have become less relevant to capital markets in the last five years:

Post-pandemic, [what we have is] An unpleasant relationship between traditional economic and consumption indicators and the stock market. . .

[Investors] They are still investing in cycles, but they are no longer in consumption cycles. At this time they are investing in technological cycles and secular trends, because they are the greatest weights in the index. Yeah [consumers] Buy more furniture and if AI and technology build more are not one for one.

There is another factor to consider. In the K -shaped recovery of the United States, consumption is promoted more than ever For rich homes. So, how the average consumer feels on the economy can be a weaker indicator of the economic trajectory that before. In addition, Brij Khurana, from Wellington, FARED INome has pointed out households without collecting, the richest homes also have the lion part in shares. Here is the percentage of actions owned by 1 percent of the United States:

Maybe, then, it’s just like rich Households feel, and what is more important, acts, which will import for securities markets on the margin. And those homes and their advisors can be in the markets in the hope of capturing the “Trump’s blow” of deregulation and tax cuts. Khurana in Wellington:

There is a lot of enthusiasm of investors that the real approach of this administration will be in deregulation and tax cuts, which leads to higher real growth rates. Until now, the administration has focused more on rates, immigration and cutting expenditure. The market still has hope that [Trump will deliver] A great bill of reconciliation and eventually focuses on deregulation and tax reform.

We still do not believe that the divergence between the feeling of investors and the consumer is good news, but it probably matters less now than before.

(Reiter and Armstrong)

What is working in US actions

The S&P 500 has moved sideways since December 6. This 11 -week mediocre section follows a year of strong and consistent profits. What has changed? What is working and what is not?

While the last three months can be aside together for American stocks of great capitalization, that hides some quite active internal ups and downs. Almost all actions slid gently from December to the beginning of January. Since then, by adjustments and beginnings, a general pattern has emerged if imperfect. Defensive actions have worked: telecommunications, pharmaceutical products and food/tobacco actions in particular. On the lost side they have been cyclic such as cars, hard consumption, discretion and consumer materials. As we notice last weekSmall economically sensitive caps have also fought.

All of that suggests a simple history of decreased trust in economic growth. This fits the recent recent economic data that we write yesterday.

It is not that a recession is suddenly imminent. If that were true, we would see the performance differentials of corporate bonds on treasure bonds. But the differentials have not moved. This is seen, on the other hand, as a very high hope that growth will simply degrade the media.

(It is worth noting that something like the opposite has been happening with the great European caps. They have seen very wide base profits, with cyclicals such as banks and industrialists particularly well. This is what happens when the market’s perspective goes from midnight black to coal gray).

But there is another part in history: lack of leadership of Big Tech. Eliminar Nvidia, Tesla, Alphabet, Microsoft, Broadcom and Amazon, and the market would increase 4 percent since the beginning of January, instead of 1 percent .

We have been asking for some years what the market would do if the leadership of the great technology failed. Now we know what he will do: stop going up.

A good reading

Vietnam.