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Kyla Scanlon, the Bloomberg columnist who coined the term vibecession to refer to the historically depressed consumer sentiment in the face of solid economic data, has declared that phenomenon is now over.
That’s not quite right. Americans still aren’t responding to the economy in a way they historically have, at least before the pandemic. Using the same model MarketWatch employed to show how different variables historically relate to consumer sentiment, the latest readings on data like the unemployment rate, house prices and mortgage rates would equate to a University of Michigan consumer sentiment reading of 89.7, as opposed to the actual 78.8 recorded in January.
But what an improvement. Using a three-month average to smooth things out, there have only been 12 instances since 1978 when there’s been at least a 4-point rise in the University of Michigan consumer sentiment index, excluding consecutive readings. January’s rise was 4.4 points.
| Consumer sentiment improvement, 3-month average | Philly Fed | S&P 500 6 months later (%) | S&P 500 12 months later (%) | |
| 8/1/1980 | 5.2 | -39.4 | 7.3 | 0.3 |
| 9/1/1980 | 5 | -10.3 | 8.4 | -7.4 |
| 10/1/1980 | 4.2 | 24.7 | 4.2 | -4.4 |
| 4/01/1983 | 6.2 | 37.2 | -0.5 | -2.7 |
| 5/1/1983 | 6.2 | 37.6 | 2.5 | -7.3 |
| 3/1/1991 | 7.4 | -11.6 | 3.4 | 7.6 |
| 4/1/1991 | 5 | -6.5 | 4.6 | 10.6 |
| 12/1/1992 | 5.1 | 25.4 | 3.4 | 7.1 |
| 1/1/1993 | 5.3 | 31.1 | 2.1 | 9.8 |
| 2/1/1994 | 4 | 21.3 | 1.8 | 4.3 |
| 5/1/2003 | 4.1 | -0.6 | 9.8 | 16.3 |
| 6/1/2003 | 4 | 3.7 | 14.1 | 17.1 |
| 1/1/2004 | 4.7 | 36.1 | -2.6 | 4.4 |
| 12/1/2005 | 4.9 | 12.9 | 1.8 | 13.6 |
| 1/1/2006 | 5.7 | 5.4 | -0.3 | 12.4 |
| 9/1/2008 | 4.6 | 2.1 | -31.6 | -9.4 |
| 5/1/2009 | 4.1 | -22.4 | 19.2 | 18.5 |
| 6/1/2009 | 4.5 | 0.2 | 21.3 | 12.1 |
| 1/1/2012 | 4.7 | 7.5 | 5.1 | 14.1 |
| 1/1/2024 | 4.4 | -10.6 | ||
| Data: FRED, University of Michigan, FactSet, MarketWatch calculations | ||||
What makes this instance unique, however, is that corporate America is anything but happy. To measure that, MarketWatch compared the periods in which there were gains of at least 4 points to the long-running Philadelphia Federal Reserve manufacturing series. Though not as bad as the New York Empire State index, the most recent Philly Fed reading was negative 10.6.
The other times the University of Michigan series was moving up significantly but the Philly Fed series was in negative territory, the economy was moving out of a recession. For example, there were three months of plus-four-point gains for consumer sentiment starting in August 1980, a month after the recession ended, as dated by the National Bureau of Economic Research. The Philly Fed reading for that first month was -39.4, though it moved up to +24.7 by October.
In March 1991 — the very month the recession ended — the UMich gauge saw a huge 7.4-point bump, and the Philly Fed index was -11.6, though it had already moved off a cycle low of -48.2. In March 2009, three months before the recession ended, consumer sentiment started moving higher but from very low levels.
Other times, consumers and businesses were happy together, like at the end of 1992, in Feb. 1994, and the end of 2005. (One particularly ignominious month was Sept. 2008, when consumer sentiment brightened and the Philly Fed gauge moved briefly into positive territory, right ahead of the worst financial crisis since the Great Depression. Hard to believe now, but people were initially relieved when Lehman Brothers went bankrupt.)
The historical parallel that would work out best is when sentiment turned higher in May 2003 — when President George W. Bush landed on an aircraft carrier with a “Mission Accomplished” banner — and the Philly Fed series was still negative but would reach double digits for the first of 21 straight times just three months later.
The median S&P 500
SPX
change when consumer sentiment picks up to this degree is a rise of 3.4% over 6 months and a gain of 7.6% over 12 — so below the average S&P annual gain of 9.9%. Put a different way, by the time Main Street has noticed the economy has improved, Wall Street has already made its money.
The market
U.S. stock index futures
ES00,
NQ00,
were steady early Tuesday after the second record close in a row for the S&P 500. The big story was in China, as the Hang Seng
HK:HSI
soared on a report of a government stimulus package. Oil futures
CL.1,
however didn’t see a big move off that report.
| Key asset performance | Last | 5d | 1m | YTD | 1y |
| S&P 500 | 4,850.43 | 1.39% | 2.01% | 1.69% | 20.66% |
| Nasdaq Composite | 15,360.29 | 2.59% | 2.45% | 2.32% | 35.16% |
| 10 year Treasury | 4.132 | 6.53 | 23.16 | 25.11 | 67.19 |
| Gold | 2,026.20 | -1.33% | -1.86% | -2.20% | 4.88% |
| Oil | 74.13 | 1.88% | 0.87% | 3.93% | -9.18% |
| Data: MarketWatch. Treasury yields change expressed in basis points | |||||
The buzz
A big session for earnings includes GE
GE,
Procter & Gamble
PG,
and Johnson & Johnson
JNJ,
with Netflix
NFLX,
and Texas Instruments
TXN,
coming after the close.
United Airlines
UAL,
stock surged in premarket trade after it forecast earnings above Wall Street estimates.
The U.S. Treasury is auctioning $60 billion of 2-year notes, the first of three big auctions this week.
The governor of the Bank of Japan said the likelihood of meeting its inflation target is rising.
Sanofi
SAN,
agreed to pay as much as $2.2 billion for assets from Inhibrx
INBX,
which has a potential treatment for a genetic disorder.
The New Hampshire Republican primary is taking place, with former President Donald Trump expected to prevail over former U.N. Ambassador Nikki Haley in the Republican race.
Best of the web
Why is Exxon
XOM,
suing to stop two yogis from pushing their climate proposals?
Meet the investors trying quantitative trading at home.
A federal appeals court revived Mexico’s lawsuit against U.S. gun manufacturers, which seeks $10 billion over drug cartel violence.
Top tickers
Here were the most active stock-market tickers on MarketWatch as of 6 a.m. Eastern.
| Ticker | Security name |
|
TSLA, |
Tesla |
|
PHUN, |
Phunware |
|
NVDA, |
Nvidia |
|
DWAC, |
Digital World Acquisition Corp. |
|
NIO, |
Nio |
|
AAPL, |
Apple |
|
AMD, |
Advanced Micro Devices |
|
GME, |
GameStop |
|
AMC, |
AMC Entertainment |
|
HDB, |
HDFC Bank |
The chart
We’ll give credit to Evercore strategist Julian Emanuel, for a note published Tuesday morning but usually written the night before, for this chart which he called China’s “national fate line” being breached. He asked whether a policy response for the ailing stock market would be forthcoming, as a report says it will be.
Random reads
Dine Brands’ unit
DIN,
Applebee’s instantly sold out its $200 “date night” pass, which requires diners to go at least seven times over a year for the pass to be economically worthwhile.
A Chinese property developer tried to entice buyers with the ad, “buy a house, get a wife for free.”
Victor Wembanyama may eventually become the world’s best basketball player, but he gave up a 76ers’ franchise-record 70 to Joel Embiid.
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