Probability Isn't Certainty
Weakening Consumer Behavior Ahead?
The holiday shortened week didn’t really offer up any notable news or events, but it did deliver the gentle gains and low volatility that are common around Thanksgiving week. The major averages posted modest gains and the VIX closed at its lowest level since just before the start of the COVID pandemic. Traditionally, December has been a good month for equities and the current lack of volatility in the market would be supportive of that idea this time around. Remember, however, that last year’s 6% loss in the S&P 500 was the index’s 3rd worst December performance of the past 30 years. Probability doesn’t equate to certainty and investors would be wise to continue keeping their guards up instead of going all in.
Given that Black Friday was just yesterday, we’ll probably hear a lot about retail sales activity during the first half of next week. The biggest shopping day of the year doesn’t hold the importance it once did because so many stores have stretched out their deals to the weeks leading up to it, but it should help give us a sense of what kind of season it will be and whether the consumer is getting worn out. The big retailers have been warning about weaker consumer behavior for a while and surveys are suggesting that more people are planning on spending less this year than spending more. We’ve been waiting for the big consumer slowdown throughout 2023 and it still has yet to really materialize.