Consumer Sentiment - Consumer sentiment data for February came in at 57.3%, exceeding expectations of 55 and improving from last month's 56.4% [2] - One-year inflation expectations decreased to 3.5% from 4%, indicating a significant downward adjustment in inflation outlook [2] - Current conditions improved to 58.3%, surpassing the expected 54.9% and last month's figures [3] Market Performance - Approximately 82% of S&P 500 stocks are currently in the green, indicating a positive market trend [6] - The MAG 7 stocks, particularly Apple and Nvidia, are contributing to market gains, with Nvidia up over 5% [7] - Despite some positive movements, Amazon's stock is down 9% following disappointing quarterly results [10] Capital Expenditure Trends - Amazon's capital expenditure is projected to reach $200 billion this year, contributing to a total of $650 billion from major tech companies including Microsoft, Meta, and Alphabet [11] - Concerns are rising regarding the sustainability of free cash flow for companies if capital expenditure continues at this rate [13] - The market is experiencing a rolling correction, with significant adjustments in multiples for tech stocks like Microsoft [14] Agricultural Commodities - Soybean prices are trending upward, with a 1% increase today, driven by optimism about potential purchases from China [16] - There is speculation that USDA data may indicate undisclosed purchases by China, contributing to a bullish sentiment in the soybean market [17] - Agricultural stocks have been performing well over the past couple of months, reflecting positive market conditions in this sector [18]

Core Insights - Consumer sentiment increased to 57.3 in February, indicating an improvement in Americans' economic mood despite ongoing concerns about inflation and the job market [1] Group 1 - The University of Michigan's monthly survey provides a preliminary reading of consumer sentiment [1] - The rise in consumer sentiment is seen as a positive signal for the economy [1] - Longstanding anxieties regarding inflation and the job market persist among consumers [1]

Economic Overview - Virginia's economy is facing increasing headwinds, with growth in Hampton Roads projected to slow according to the 2026 Annual Economic Forecast [1] - The event was attended by over 350 business and community leaders to discuss economic prospects for the coming year [2] Key Economic Challenges - Rising inflation, consumer pessimism, slowed job growth, lack of housing inventory, and negative impacts of tariffs were highlighted as primary challenges [3] - Virginia's economic growth was lower in 2025 due to reductions in federal civilian employment, higher tariffs, and policy uncertainty [3][5] Wealth Distribution - While some economic figures indicate growth in the U.S., the wealth distribution shows that households in the top 30% are faring better than the remaining 70%, who are either spending more than they earn or just breaking even [4] Recession Indicators - Moody's indicates that Virginia is already in a recession, with slow growth expected to continue into 2026 [5] - Rising prices of essential items, such as a 20% increase in coffee prices in 2025, are contributing to low consumer sentiment [6] Employment Trends - Employment growth is slowing, with over 6,000 federal civilian jobs lost in Hampton Roads and more than 23,000 across Virginia in 2025 [7] - The federal civilian workforce lost 179,000 workers nationally in October 2025, indicating a significant downturn [7] Labor Market Conditions - Virginia began shedding labor force participants in February 2025, continuing through the year, resembling recessionary conditions in the labor market [8] - 2025 experienced the weakest job growth since the pandemic, with employers becoming hesitant to hire [8] Housing Market Insights - The housing market in Hampton Roads faces a supply problem, with inventories significantly below normal averages [9] - A call for a basic housing strategy and reforming zoning regulations was made to promote high-density, mixed developments and reduce living costs [9] Economic Growth Strategies - To stimulate economic growth, the private sector needs to diversify and explore areas with competitive advantages [10] - Increased defense spending is expected to benefit the Hampton Roads economy, although it presents certain downsides [9]

Core Viewpoint - Capri Holdings, owner of Jimmy Choo, reported lower third-quarter sales but exceeded earnings and free cash flow expectations due to a significant reduction in net debt [1][6] Financial Performance - Revenue from continuing operations decreased by 4% year on year to $1.025 billion, or 5.9% at constant currency [1] - Gross profit fell to $623 million, with a margin of 60.8%, down from $674 million and 63.1% previously [2] - Operating margin improved to 4.5% from 2.4%, and net income from continuing activities rose to $57 million from $6 million a year earlier [1][2] - Diluted earnings per share from continuing operations increased to $0.47 from $0.05, with adjusted diluted EPS rising to $0.81 from $0.63 [2] Cash Flow and Debt - Operating cash flow reached $271 million, generating $252 million in free cash flow after $19 million of capital expenditure [2] - Cash and cash equivalents totaled $154 million, with borrowings of $234 million, resulting in net debt of $80 million, down from $1.17 billion a year earlier [3] Brand Performance - Michael Kors reported revenue of $858 million, down 5.6% on a reported basis and 7.3% in constant currency, with an operating income of $119 million and a margin of 13.9% [3] - Jimmy Choo generated revenue of $167 million, up 5% reported and 1.9% in constant currency, with an operating profit of $3 million, recovering from a $6 million loss [3] Regional Sales - Americas sales declined to $646 million from $696 million, EMEA sales increased to $268 million from $256 million, and Asia sales slipped to $111 million from $116 million [4] Year-to-Date Performance - For the nine months ending December 27, 2025, Capri reported revenue of $2.67 billion, down from $2.79 billion in the prior year, with net income attributable to the group reaching $141 million after a $537 million loss previously [4] Future Guidance - Capri issued adjusted guidance for fiscal 2026, projecting revenue of approximately $3.45 billion to $3.475 billion from continuing operations [5] - For Michael Kors, anticipated revenue is around $2.86 billion to $2.87 billion with an operating margin in the high single digits, while Jimmy Choo is forecasted to generate $590 million to $600 million in sales with a negative low single-digit operating margin [5] Management Outlook - The company remains exposed to global macroeconomic conditions, potential tariff increases, inflation, weaker consumer sentiment, and currency fluctuations [6] - Capri Holdings' chairman and CEO expressed confidence in the third-quarter performance and the strategies in place to support a return to growth in fiscal 2027 [6]

Summary of the U.S. Consumer Pulse Survey: AI Use in the Spotlight Industry Overview - **Industry**: U.S. Consumer Behavior and AI Adoption - **Survey Period**: January 22nd - January 26th, 2026 - **Sample Size**: Approximately 2,000 consumers in the U.S. Key Findings on AI Usage - **AI Adoption**: - 75% of respondents use AI for personal reasons at least rarely, while 72% use it for work-related activities [5][6] - Over half of the respondents use AI at least monthly for both personal and professional purposes [6] - 38% use AI to learn about new topics for personal purposes, and 64% for writing, editing, or summarizing text at work [5][14] - **Demographic Insights**: - Younger consumers (ages 25-34) are the most frequent users of AI, with 28% using it daily for personal purposes and 28% for work [9][10] - 41% of respondents aged 55 and older report never using AI for personal purposes [9] Consumer Spending Outlook - **Post-Holiday Spending**: - 29% of consumers expect to spend more next month, while 17% expect to spend less, resulting in a net spending outlook of +12%, down from +22% in November [5][30] - Expected spending on toys is projected to drop by 18%, and apparel by 7% [5][30] - **Inflation Concerns**: - 53% of consumers are concerned about rising prices, a decrease from 57% in the previous survey [31][30] - Inflation remains the top concern for low and middle-income respondents, while higher-income respondents are more concerned about the political environment [31][36] Consumer Confidence and Economic Outlook - **Economic Sentiment**: - 36% of consumers expect the economy to improve in the next six months, while 42% expect it to worsen, yielding a net score of -6% [30][55] - The outlook for household finances has improved, with a net score of +22%, up from +12% in the previous wave [30][58] Travel Intentions - **Travel Plans**: - 60% of consumers plan to travel in the next six months, an increase from 58% in the previous wave [30][95] - Visiting friends and family is the most common reason for travel, cited by 65% of travelers [30][95] Additional Insights - **Consumer Engagement**: - Participation in out-of-home activities remains consistent, with 67% dining out, although the net engagement outlook is trending negative at -9% [86] - Online shopping remains prevalent, with 64% purchasing non-grocery items online [91] Conclusion The survey indicates a significant adoption of AI among U.S. consumers, with notable differences in usage patterns across demographics. Consumer spending outlook shows a seasonal decline post-holidays, with inflation concerns still prevalent. Economic sentiment is cautiously optimistic, particularly regarding household finances and travel intentions.

Core Insights - The University of Michigan Index of Consumer Sentiment reached a low of 51 in November, marking the second-lowest reading since the early 1950s, which may suggest a challenging environment for equity markets [1] - Historical data indicates that low consumer sentiment does not necessarily correlate with poor stock market performance; for instance, after a similar low in June 2022, the S&P 500 gained over 17% in the following year [2][4] Consumer Sentiment Analysis - The lowest recorded sentiment reading was 50 in June 2022, coinciding with a bear market driven by high inflation and aggressive Federal Reserve rate hikes [1] - The S&P 500 did not reach its bottom until October 2022, but subsequent performance showed a significant recovery [2] Investment Strategy - Warren Buffett's investment philosophy emphasizes buying during periods of fear in the market, suggesting that low sentiment can present buying opportunities [3] - The analysis of consumer sentiment and S&P 500 returns over time supports the notion that poor sentiment can lead to favorable stock market returns in the long run [4] Data Analysis - A comprehensive study was conducted using monthly Consumer Sentiment Index readings from 1985 and corresponding S&P 500 index values [5] - The study categorized sentiment readings into 5-point ranges and analyzed the average forward 12-month S&P 500 returns for each range [6] Summary of Findings - Consumer Sentiment Range and Average Forward 12-Month S&P 500 Returns: - Below 55: 14.34% return (2 instances) - 55-59.9: 12.65% return (16 instances) - 60-64.9: 11.57% return (16 instances) - 65-69.9: 10.97% return (31 instances) - 70-74.9: 11.39% return (39 instances) - 75-79.9: 11.25% return (40 instances) - 80-84.9: 7.91% return (45 instances) - 85-89.9: 9.79% return (55 instances) - 90-94.9: 9.69% return (116 instances) - 95-99.9: 12.47% return (70 instances) - 100+: 8.96% return (50 instances) [7]

Economic Outlook - The new Fed chief is focused on lowering interest rates to manage national debt, with $10 trillion needing to roll over in the next year [2][4] - Inflation indicators show gold and copper prices near all-time highs, while the dollar has fallen to a four-year low, suggesting inflation may be rising [2] Federal Reserve and Interest Rates - There is a belief that the Fed's long-standing view that economic growth causes inflation is incorrect, leading to current inflation issues [3] - Concerns are raised about the impact of rising interest rates on government payments, with mortgage rates doubling from 3.5% to 7% [4] Consumer Sentiment and Spending - Despite low consumer sentiment at a 12-year low, consumer spending remains strong, potentially influenced by media coverage [8] - The economic press may negatively affect consumer sentiment, creating a self-fulfilling prophecy [9] State Taxation and Migration - New York City is facing a fiscal crisis, with a proposed tax increase on the top 1% to address a $12 billion budget gap [10] - New York State saw only 1,080 new residents added last year, with a significant outflow of residents, indicating a trend of migration away from high-tax areas [11][12] Technological Change and Labor Markets - Concerns are raised about government intervention in response to AI disruptions in labor markets, emphasizing that disruption does not equate to destruction [16] - Historical context shows that technological advancements have led to increased productivity without resulting in mass unemployment, but the speed of change with AI is a new challenge [17][19]

Core Viewpoint - PulteGroup reported a decline in fourth-quarter profit due to ongoing weak consumer sentiment negatively impacting home sales [1] Company Summary - PulteGroup's fourth-quarter profit decreased as a result of challenging market conditions [1] - The company is facing difficulties in home sales attributed to low consumer confidence [1] Industry Summary - The housing market is experiencing a downturn, influenced by weak consumer sentiment [1] - Overall home sales are being adversely affected, indicating broader challenges within the real estate sector [1]

Core Viewpoint - Consumer outlook improved in January, with the University of Michigan's Index of Consumer Sentiment rising to 56.4 from 52.9 in December, indicating gains in both current conditions and expectations [1] Consumer Sentiment - The headline sentiment index is over 20% lower than a year ago, highlighting persistent inflation pressures and labor market uncertainty affecting household psychology [3][6] - Year-ahead inflation expectations decreased to 4.0%, down from December, providing some relief, but longer-term expectations edged higher, indicating skepticism about price stability [4] Financial Conditions - Consumers acknowledge recent inflation slowing but feel prices remain high relative to income growth, influencing everyday spending decisions, especially for essentials [5] - Approximately two-thirds of consumers are living paycheck to paycheck, with a growing number doing so out of necessity rather than choice [9] Economic Indicators - Weekly jobless claims remain stable, suggesting continued labor market stability, while GDP data indicates solid output despite households expressing uncertainty about their finances [7] - Fewer than half of consumers feel they could manage a $1,000 unexpected expense without falling behind on obligations, reflecting underlying financial fragility [10] Spending Behavior - Consumers are likely to remain cautious in spending, focusing on necessities while filtering discretionary purchases through concerns about income stability and unexpected expenses [12]

Group 1 - The University of Michigan consumer sentiment index reported a headline figure of 56.4%, significantly higher than the expected 54, marking the best level since August of the previous year [1] - Current conditions index stands at 55.4%, also exceeding expectations of around 52, indicating improved consumer sentiment [1] - Expectations index reached 57, two points higher than anticipated and the best since July of last year [2] Group 2 - One-year inflation rate is reported at 4.0%, down from 4.2%, representing the lowest level since January of the previous year [3] - The five to ten-year inflation outlook is at 3.3%, slightly below expectations and the lowest since December of last year when it was 3.2% [3] - Leading economic indicators for October and November are anticipated but have not yet been released [3]