No Landing

Consumer is still very strong but most of the other data is fairly mixed

Summary: Visa and Amex say that the consumer is still very, very strong, but most of the other data is fairly mixed. Interest rate-sensitive sectors like housing seem to be under the most pressure. Low-income consumers also continue to feel stress. Long-term interest rates have come down though and that has relieved some pressure. Capital markets appear optimistic that the worst of Fed policy is over.

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Macro

Visa and Amex say that the consumer is still very, very strong

"We don't see a whole lot of change at all, which is kind of remarkable when we look at. What I mean by that is, let's start with the consumer. And I've heard different people say different things about what they're seeing in terms of spend and consumer balances. But what we're seeing in terms of consumer spend is just an incredible consistency across both debit and credit spend…We sit here today, the consumer is still very, very strong." - Wells Fargo (WFC 0.00%↑) Charles Scharf 

“...as you look at our business drivers, through the first 3 weeks of November, we've seen our underlying business drivers remain quite stable to what we saw in Q4. Specifically, in the U.S., payment volume, and payment transactions have remained pretty consistent, adjusted for fuel and days mix, which is some of the things that I did talk about in our October earnings. And the cross-border recovery continues to recover -- cross-border volumes continue to recover, and we're seeing incremental improvements in travel and cross-border volumes relative to their 2019 index. So all in all, if there's a meta message there, I'd say our underlying business remains quite stable” - Visa (V 0.00%↑) CFO Christopher Suh

"In October, everybody got a little bit, you know, a little bit skittish, and I think other people have said the same thing,..But if we look at November, November is back to sort of what we looked like in the third quarter. In our holiday season, U.S. consumer retail was very strong from Thanksgiving all the way to Cyber Monday. So we're very encouraged by that. Overall, goods and services from a retail perspective, from a consumer retail and international, both U.S. and international, very, very strong." - American Express (AXP 0.00%↑) CEO Stephen Joseph Squeri

It’s been a good start to the holiday season

"Spend is still solid, and has returned to be in line with pre-pandemic historical norms. A stable cohort of customer spend is relatively flat year-on-year, but that again is relatively consistent with pre-pandemic. And then, obviously, when you take into consideration that we're constantly adding new customers to our books, we're seeing spend growth continue to be robust and we had a good holiday season. So, I think spend continues to hold up nicely." - JPMorgan Chase (JPM 0.00%↑) Co-CEO of Consumer and Community Banking Marianne Lake 

There hasn’t been any landing (soft or hard)

"So our thinking is the economy actually has been holding up very well this year, as we all know. Sometimes the discussion was, is it going to be a hard or soft landing? The reality is still no landing at all this year from an economic perspective. But the prediction of our economical group is that we definitely will see a slowdown of the growth in the first half of next year for a couple of reasons." - S&P Global (SPGI 0.00%↑) CEO Ewout Lucien Steenbergen

Growth has slowed though

"Year-to-date, the volumes are up, it's only going about 4% now. In the month of November, it grew about 3% to 4%. Now that being said, Black Friday was a record Black Friday, up 3.5% versus last year, which was a record. The Cyber Monday was a record. The whole weekend was a record but it's much more consistent with that money moving out of customers' accounts with a lower growth, low inflation economy, and that's what you're seeing." - Bank of America (BAC 0.00%↑) CEO Brian Moynihan

And excess savings are starting to run out

"Cash balances, we were here last year saying they're normalizing. That has continued. We're getting pretty close, it feels like, to the end. There is still more cash buffers than there were pre-pandemic, but we're talking about days, particularly for the lowest-income customer. So whereas pre-pandemic, the lowest-income customer had on hand, say, 12 days of cash to meet outgoings. Now it's, say, 15. So it hasn't fully normalized, but we're kind of splitting atoms at this point. We're getting there. You can pick your moment some time early into next year. And so we're still on that journey but getting closer to the end." - JPMorgan Chase (JPM 0.00%↑) Co-CEO of Consumer and Community Banking Marianne Lake 

Interest rate-sensitive sectors are struggling

"Our sales volumes became more challenging as we moved throughout the quarter, and most of this decline came in the last month of the quarter. Although we did have some operational challenges as we implemented our new LOS, there was also a dampening in the overall used vehicle market because of continued affordability challenges for our consumer." - America's Car-Mart (CRMT 0.00%↑) CFO Vickie Judy

"...if you want to sum it all up is that we're seeing a more pronounced pullback in DIY discretionary spend than what we anticipated." - Lowe's Companies (LOW 0.00%↑) CEO Marvin Ellison

Lower-income consumers are also struggling

"Family Dollar fell short of our quarter three comp expectations. Similar to what other retailers have reported, we experienced softening trends throughout the quarter, particularly in October, as lower-income consumers responded to the accumulated impact of inflation and reduced government benefits, we saw a notable pullback in spending, particularly in higher margin discretionary categories." - Dollar Tree (DLTR 0.00%↑) CEO Rick Dreiling

"During our most recent survey work, our customer continues to tell us they are feeling significant pressure on their spending which is supported by what we see in their behavior. Based on these trends and what we see in the macroeconomic environment, we anticipate customer spending may continue to be constrained as we head into 2024, especially in discretionary categories." - Dollar General (DG 0.00%↑) CEO Todd Vasos

"Although the macro environment has seen some cooling of inflation over the quarter, the lingering financial and psychological effects of the worst part of inflation of 4 decades continues to impact our consumers." - America's Car-Mart (CRMT 0.00%↑) CEO Doug Campbell

Labor markets have slowed too

"We've reduced our headcount through a voluntary employee package separation package that is going to drive about $1 billion of savings annually for us. Most of those people are already gone. There's a few that are working through some transition." - General Motors (GM 0.00%↑) CFO Paul Jacobson

Long-term interest rates have been coming back down

"The encouraging news is that in the past few weeks, we've seen mortgage rates back off from the recent highs at the end of October. In addition, the interest rate outlook today is much brighter, given better results from inflation data. It feels like we could experience the same pattern as last year in the coming spring selling season." - Hovnanian Enterprises (HOV 0.00%↑) CEO Ara Hovnanian

"...it seems that they've got inflation somewhat under control. It seems like the Fed's becoming more confident. And if we can start to see a move in interest rates and easing in interest rates, the federal funds rates and the mortgage rates that'll help." - RH (RH 0.00%↑) CEO Gary Friedman

And this has relieved some pressure

"No matter how you look at it, our sales pace has improved significantly for each of the four months shown on this slide compared to the previous year. The amount of improvement was less in October, and sales slowed more than we would expect seasonally. But sales bounced back a bit in November, ending with an increase of 43% compared to last year. Finally, the sales pace in the first weekend in December has started off very strong, and it's been much better than we would normally expect seasonally." - Hovnanian Enterprises (HOV 0.00%↑) CEO Ara Hovnanian

Inflation pressure has also subsided

"Data for October indicated an easing in economic activity, and forecasts for the fourth quarter show the kind of moderation that is more in keeping with progress on lowering inflation." - US Federal Reserve Governor Christopher Waller 

Markets are becoming a little bit more optimistic 

"We've been laying the groundwork on a lot of the calls at earnings about what we have to see in markets to see things re risk, right? We talked about a Fed pause. We talked about having to see more certainty in the term structure, in the shape of the curve. We started talking about seeing inflation data cool a little bit. All those things have been happening, and you've seen a decidedly more positive tone and sentiment in markets that I'm very optimistic will carry into 2024. We see it in some of the flow data for Q4. Through the end of November, we've had about $54 billion of inflows into iShares ETFs, pretty much evenly split between core equities and bonds. And we've seen some good firming up in precision ETFs that are positive to the tune of about $8 billion also, which tells you something not just about the seasonality of those flows, but investors having a more positive sentiment in terms of where they're moving from cash and into risk assets." - BlackRock (BLK 0.00%↑) CFO Martin Small

"...as the Fed tightened cycle kind of tops out maybe has reached its limit or is very close to reaching its limit. We're definitely seeing signs of thawing in the financing markets" - Lazard (LAZ 0.00%↑) CEO of Financial Advisory Peter Orszag

"I think over the course of the fourth quarter, I think confidence is building...I think we'll have a bit of a more clear runway in 2024." - Goldman Sachs Group (GS 0.00%↑) CFO Denis Coleman

International