For Everything Else There’s $MA

“A more cautious but not recessionary consumer” was the tone Citi CEO Jane Fraser set during the bank’s earnings last Friday. Its peers, JPMorgan Chase and Wells Fargo, signaled similar “vibes” as they continued to rachet up loan loss reserves and bolster their deposit bases. 💰

Add on top of that consumer sentiment experiencing its largest one-month surge since 2006, and you’ve got a lot of positivity about the U.S. consumer lately. 👍

Despite all the mixed signals we’re getting, consumers are still spending. Yes, they’ve shifted their behaviors towards spending more on necessities. And when they do spend their discretionary funds, they opt more for services and experiences than goods. But they’re spending, which is good for the U.S. economy since it holds a roughly 70% weighting in our Gross Domestic Product (GDP). 🛍️

Whether or not this resilience will continue is everyone’s question. However, the market seems optimistic, given that shares of payment-processor Mastercard are hitting new all-time highs. And its peers, Visa and American Express, aren’t far behind. 💳

It’s unlikely the market would be bidding up the world’s largest payment processors if it thought a material slowdown in spending was ahead. As always, the market could be very wrong in its assumptions. However, we thought it was important to point out this development as Wall Street, the Fed, and other investors flesh out their “U.S. consumer narrative.”

Playing off Mastercard’s slogan, a soft landing would definitely be “priceless.” 😜

On a related note, European luxury goods maker Richemont fell over 10% today. While the Cartier and Van Cleef & Arpels owner experienced a boost in China, weaker-than-expected demand in the U.S. weighed on its results. That sent a ripple through the high-flying European luxury goods sector and signaled that the high-end U.S. consumer could be beginning to change its behavior. Investors will keep an eye on this through third-quarter earnings and year-end. 👀

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