The American consumer is proving to be the hero of the current market cycle. With spending in November exceeding expectations and layoffs remaining at historic lows, the retail sector is looking at a strong finish to the year. This consumer strength is the primary engine behind the 0.5% rise in the S&P 500.
The ease in trade tensions—specifically the pullback on European tariffs—is also a win for the consumer. Threatened tariffs often lead to higher prices on imported goods; by calling them off, the administration has inadvertently helped keep a lid on potential retail inflation. This is reflected in the market’s positive reaction to the “TACO” trend.
In Asia, a similar sentiment is brewing. As markets in South Korea and Japan rise, the wealth effect is expected to support local consumption. The Bank of Japan’s decision to keep rates at 0.75% means that borrowing costs for consumers remain relatively low, supporting the central bank’s goal of firming up price pressures.
However, the high price of gold and silver suggests that consumers and investors alike are still cautious about the future. While they are spending today, they are also buying “insurance” in the form of precious metals. This dual behavior shows a market that is enjoying the current gains but is wary of the next geopolitical shift.
Would you like me to analyze how these trends might impact specific retail stocks or provide a deeper dive into the “TACO” effect’s history?