Retail and restaurant chains are starting to feel the impact of persistent inflation, especially as lower-income customers cut back on spending. Burrito chain Chipotle Mexican Grill Inc. (NYSE:CMG) recently saw its stock tumble 19% in a single day after missing third-quarter revenue estimates and cutting its full-year same-store sales forecast. The fast-casual restaurant chain, where an average burrito and bowl costs about $10-$12, is struggling as fewer young Americans dine out due to rising inflation an ...

Peter Atwater, adjunct professor of economics at William & Mary and president of Financial Insyghts, knows a thing or two about the K-shaped economy. Anonymous Twitter user “Ivan the K” introduced the idea of a “K recovering” following the pandemic, a gloomy outlook where some elements of life before COVID would recover, while some will not. Atwater popularized it.Atwater credits Ivan the K for the coining the term, but said he was the first to run with it, publishing a series of pieces in 2020 about the gr ...

Core Insights - The iPhone 17 series has generated significant consumer interest, with preorder sales breaking records in China, indicating strong potential for Apple's stock performance during the holiday season [1][2] - The new iPhone models feature improved specifications, and the pricing strategy for the standard model remains attractive to consumers, which may drive sales [2] - The iPhone Air model has received lukewarm interest, but the base and pro models are expected to perform well regardless of the Air's sales [3] Sales Performance - Preorder sales for the iPhone 17 series in China exceeded previous years, with JD.com reporting more preorders in the first minute than the entire first day sales of the iPhone 16 [1] - The standard iPhone 17 model is the best-selling variant in the series [1] Stock Performance - Apple's stock has seen a 25% increase in September and an additional 16% in October, with significant jumps during the product launch cycle [5] - The stock reached an all-time high of $285 on October 30, 2025, and is expected to continue rising during the holiday shopping season [6][7] Market Trends - Historically, Apple’s stock prices have increased in the last two months of the year, often reaching record highs in December [7] - Short-term investors may find Apple stock appealing ahead of the holiday season, while long-term investors might consider waiting until early 2026 due to typical post-holiday price retracements [9]

Core Viewpoint - The company has downgraded its outlook on value to negative due to concerns over cost pressures in certain segments, particularly staples, while maintaining a positive stance on growth driven by technology [2][3]. Sector Analysis - Growth is primarily dominated by technology, which continues to show strong profitability and earnings beats, contrasting with value sectors facing cost pressures [2]. - Consumer sentiment is declining, which is expected to negatively impact value sectors [3]. Momentum and Quality - Momentum has been adjusted to neutral, indicating a cautious approach, while quality remains neutral as well [4][6]. - The company has shifted its focus from large-cap stocks to big tech within the large-cap category, reflecting a change in strategy [5]. Economic Outlook - There is a low probability of a recession, with robust consumption despite a weakening labor market [7]. - The primary concern in the market is the scale of AI spending and the uncertainty regarding returns on that investment [8]. AI Investment Concerns - If AI spending decelerates, it could lead to significant market implications, particularly if it becomes reliant on credit markets for capital expenditures [8][9]. - A potential macroeconomic slowdown could coincide with a pullback in AI capital expenditures, which would have negative consequences, although this scenario is not considered the base case [10]. Earnings Performance - Current earnings reports show strong performance, with over 90% of companies reporting nearly 50% growth in earnings and approximately 6.5% growth in sales, indicating good operating leverage in the system [10].

Group 1 - Retail spending in the U.S. grew by 0.6% month-over-month in October, reversing a 0.5% decline in September, indicating resilience in consumer spending despite low consumer sentiment [1][6] - The National Retail Federation (NRF) expects retail spending to exceed $1 trillion during the holiday season, driven by a strong stock market and consumer prioritization of holiday traditions [4][6] - Companies like Bark and Ralph Lauren are optimistic, with Bark's advent calendar selling out at Costco and Ralph Lauren raising its revenue forecast for the fiscal year [3] Group 2 - Lower-income consumers may show weakness in spending patterns, but many still prioritize holiday spending, potentially pulling back in other areas [2] - NRF Chief Economist Mark Mathews noted that consumers are likely to make savings in other areas to maintain spending on loved ones and family during the holidays [5] - Shopify anticipates revenue growth in the mid- to high-20 percent range year-over-year for the final quarter, reflecting resilient consumer demand [5][6]

Core Insights - U.S. consumer sentiment has declined to its lowest level in over three years, with a preliminary reading of 50.3 for November, significantly below the expected 53.2 [1][2] - The decline in consumer sentiment is attributed to concerns over the economic impact of the ongoing government shutdown, with a notable 6% drop in sentiment this month [3] Consumer Sentiment Breakdown - The decline in sentiment was widespread across demographics, including age, income, and political affiliation, with the exception of consumers in the top tercile of stock holdings, who saw an 11% increase in sentiment [5] - Current personal finances saw a 17% drop, while expectations for business conditions a year ahead fell by 11% [3] Inflation Expectations - Consumers' expectations for inflation increased slightly from 4.6% to 4.7%, although this remains lower than earlier readings [5] - Longer-term inflation expectations decreased from 3.9% to 3.6%, now below the midpoint of previous year's readings and the peak in April 2025 [6] Economic Context - Recent inflation trends have been influenced by rising tariffs, with the September consumer price index showing inflation at 3%, exceeding the Federal Reserve's target of 2% [7] - The Federal Reserve is focused on maintaining longer-term inflation expectations near its target as it considers interest rate adjustments [10]

The dollar index (DXY00) on Friday fell to a 1-week low and finished down by -0.15%.  The dollar moved lower on Friday due to some carryover pressure from Thursday, when a report from Challenger showed US job cuts in October surged by 175% y/y, the most in 22 years, bolstering the outlook for the Fed to keep cutting interest rates.  The dollar fell to its lows on Friday after the University of Michigan's US Nov consumer sentiment index fell more than expected to a nearly 3.5-year low. The dollar is still ...

ToplineViews on the U.S. economy fell to a three-year low among Americans this month as consumers expressed growing concerns about the government shutdown, according to a widely tracked survey released Friday by the University of Michigan. Economists have warned of a divided economy in recent weeks, with high-income Americans driving consumer spending.Getty ImagesKey FactsConsumer sentiment—a monthly survey on Americans’ views on the economy—fell to 50.3 in November from 53.6 in October, below the historica ...

Core Insights - The ongoing U.S. government shutdown has significantly impacted consumer sentiment, driving it to its lowest level in over three years, with a reading of 50.3 in November, reflecting a 6.2% decline from the previous month and approximately 30% from a year ago [2][3][4]. Consumer Sentiment - The University of Michigan's Index of Consumer Sentiment indicates a notable decline, with economists expecting a higher reading of 53.0, compared to the actual reading of 50.3 [3][4]. - The current conditions index fell to 52.3, marking an almost 11% drop from the previous month, while consumer expectations decreased to 49.0, down 2.6% [5]. Economic Concerns - Consumer worries about the government shutdown have overshadowed positive sentiment from record-high stock prices, with widespread declines in sentiment observed across various demographics, including age, income, and political affiliation [4]. - The survey highlighted that sentiment among individuals with significant stock holdings improved by 11%, indicating a disparity in consumer sentiment based on asset holdings [6]. Inflation Outlook - Inflation expectations remain relatively stable, with the one-year outlook slightly increasing to 4.7%, while the five-year outlook decreased by 0.3 percentage points to 3.6% [5].

Consumer Sentiment - U.S. consumer sentiment declined significantly in November, with the University of Michigan's preliminary reading at 50.3, down from 53.6 the previous month and below the estimated 53.0, indicating growing consumer pessimism [2][10] - The sub-indices showed a decrease in current conditions to 52.3 from 58.6, missing the estimate of 59.2, while consumer expectations fell to 49.0 from 50.3, also below the forecast [3][10] Inflation Expectations - Short-term inflation expectations for the next year increased slightly to 4.7% from 4.6%, exceeding the previous estimate of 4.6% [4][10] - In contrast, longer-term inflation expectations for five years decreased to 3.6% from 3.9%, falling short of the 3.8% estimate, suggesting a potential moderation in inflation over a longer horizon [5][10] Market Reaction - Following the release of the disappointing consumer sentiment data, major U.S. stock indices opened lower, with the Nasdaq down 173.93 points (0.75%), the Dow Jones down 210.30 points (0.45%), and the S&P 500 down 33.09 points (0.49%) [6][10] Corporate News - UBS raised its price target for AbbVie (ABBV) to $220 from $195, coinciding with the peak week of Q3 earnings season, where over 2,700 companies are scheduled to report [7][10]