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Retail Data Sends A Warning: Why the Market Feels Great (Until It Doesn’t)
The Market Is Partying Like It’s 1999
The S&P 500 just notched 6,388.64, another record high in a rally that feels like it’s fueled by Red Bull, tech earnings, and rate cut fantasies. It’s up 8.6% YTD and 28% since April — one of the fastest runs ever.
If your portfolio isn’t green, you’re probably holding cash… or bonds… or gasp value stocks.
But under all that champagne and confetti, something isn’t adding up. Like a DJ ignoring the smell of smoke in the club, we’re all dancing while consumer spending quietly coughs in the corner.
Retail Data: The Buzzkill in the Room
Yes, nominal retail sales rose 0.6% last month. Cue headlines like “Consumers Still Spending!”
But strip out inflation — and suddenly, retail looks… flat. Like your uncle’s backyard beer. Real (inflation-adjusted) retail sales haven’t moved much since the stimmy check era of 2021.
And historically, this kind of stall? It’s what we saw before or during every recession since color TVs.
Translation: Consumers are spending more… to buy less. That’s not growth. That’s inflation wearing a trench coat.
Why This Matters for Stocks (A Lot)
Let’s connect some dots:
- Corporate earnings come from consumer spending.
- If the consumer is slowing, revenues will too.
- And if revenues stall, EPS growth drops — even if margins hold.
Retail = ~40% of PCE → PCE = ~70% of GDP → GDP = markets care a LOT.
Correlation between forward earnings and PCE? Over 51%. That’s not noise — that’s a legit red flag fluttering under your AI-generated portfolio.
Meanwhile… Euphoria Is Getting Uncomfortable
Let’s talk vibes:
- The VIX is below 15. Translation: Nobody’s scared.
- 0DTE options are booming. Translation: Everyone’s gambling.
- High-beta stocks are getting crowded. Translation: Retail is chasing risk like it’s 2021 again.
- Tech is now 34% of the S&P 500. That’s the same as the dot-com top in 2000.
Oh, and the Nasdaq 100 hasn’t dipped below its 20-day moving average in 60 sessions. Last time that happened? Early 1999. We all remember how that ended. (Well… most of us. The rest are still holding Pets.com stock.)
So, What’s the Smart Money Doing?
Let’s just say it’s quietly inching toward the exit. Not running — but watching the door. Because when everyone’s bullish, and everything’s overbought, you eventually run out of buyers.
Even Spencer Jakab at the WSJ joked that no one really knows why we’re rallying. Which is… not comforting. It’s like your Uber driver saying, “I don’t know how we got here, but here we are!”
What Should You Actually Do?
Let’s be real: no one wants to sit out a rally. But you also don’t want to be the last one holding the bag of FOMO-fueled microcaps when Jerome Powell coughs slightly wrong at the next FOMC presser.
Here’s how to vibe-check your portfolio without becoming the next cautionary tale:
Hold Quality: Free cash flow, clean balance sheets, and durable margins. These are your friends.
Limit YOLO Trades: Speculative bets = 5–10% max of your portfolio. Meme stocks are not an asset class.
Hold and/or Raise Cash: 10–20% is a tactical advantage, not a sin. Dry powder > forced selling.
Use Options Wisely: Covered calls = smart. Naked 0 DTE calls on Rivian = therapy bills.
Watch Sentiment: When CNBC starts launching Gen Z stock indexes again, it’s time to rebalance.
Trim the Froth: AI, microcaps, and your cousin’s favorite SPAC may need a haircut.
Final Thought: This Feels Familiar (Because It Is)
Remember the euphoria of 2021? NFTs, Dogecoin, “stonks only go up”? It all worked… until it didn’t.
Today’s market has all the same markers: record highs, max bullishness, and consumers stretched like yoga pants in January.
So enjoy the rally. But maybe move your chair a little closer to the exit. Because eventually, someone yells “fire” — and the bots don’t wait for humans to leave first.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.
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