Inside Markets — U.S. Consumer

Updates on the U.S. consumer from yesterday’s sell-side Financials conference were mostly positive. AXP’s CFO noted some softness in airlines and lodging, while other travel/entertainment spending remains “very, very strong”. He added that overall consumer spending trends in Q2 remain consistent with Q1.

A tactically bullish outlook requires ongoing macro data resilience, improving trade talks and upside estimate revisions. Labor market data is the key macro input with resiliency defined as monthly non-farm payroll growth > 100,000. Weekly jobless claims are the high frequency labor data to watch with anything above +260,000 signaling some degree of deterioration. Putting trade talks aside, Q2 SPX earnings growth should clear a relatively low bar. Sell-side analysts made larger than normal cuts in April/May to their Q2 estimates, cutting by ~4% vs. a ~2.5% average decline.