Daily Commentary

MarketMinder’s View: Move over, FOMO (fear of missing out)—another fear (FORO, or fear of running out [of money]) is in town. According to several surveys discussed here, many retirees worry about outliving their money. “It’s easy to understand why. Costs are rising in almost every aspect of life, particularly healthcare, which eats up more of a retiree’s budget as they age. On top of that, there’s the worry that Social Security benefits may be cut by 22% in just six years, while healthier Americans may live longer—and face more years of expenses—in retirement. It’s a lot of uncertainty to wrestle with in a spending plan.” Retirees aren’t alone in their dour outlooks. As the article also notes, one report found 75% of US adults feel guilty about “fun” spending. Another found 4 in 10 Americans worry daily about retirement saving. From a human perspective, we feel for those anxious about their finances. Households stateside and abroad have grappled with higher prices for the past several years. It is stressful. However, from an investment perspective, feelings and emotions don’t correlate with action. Folks’ economic outlooks may skew negative because of the nonstop barrage of negative news. But many recognize their own personal situation isn’t dire. That disconnect partially explains the last line here—that nearly 4 in 10 Americans also “often feel hopeful when they think about their finances.” Contradicting takeaways show why surveys aren’t reliable indicators of future activity. We suggest watching what people do, not just what they say. For more, see our September commentary, “Low Vibes Aren’t Keeping America’s Economy Down.”   

MarketMinder’s View: We are nearing eight months since hostilities broke out in the Middle East, leading to the Strait of Hormuz’s “closure.” Despite the major disruption, oil is still moving through the contested waterway. “But while Iran’s escalated attacks on tankers appear aimed at reversing the surge, data from firms that track oil shipments suggest that the recent recovery in exports through the strait has held up. TankerTrackers.com said over 12 million barrels of crude a day had gone through the waterway on average this month, slightly higher than September’s average. ‘Exports continue to strengthen,’ said Samir Madani, a co-founder of TankerTrackers. Kpler, another maritime analysis firm, said nearly 10 million barrels of oil a day had gone through the strait this month, down from around 11 million in September.” That ongoing activity doesn’t mean transport has been easy. Escalating tanker strikes have caused casualties. Shipping oil is much more expensive than before the conflict began. But we have long argued Strait of Hormuz disruptions wouldn’t automatically mean a global oil shortage. Companies’ resilience and willingness to take risk are big reasons why. For more, see our April commentary, “Easing Hormuz’s Grip for the Long Term.”

MarketMinder’s View: September US retail sales rose 0.8% m/m, beating consensus estimates of 0.3% (per FactSet). Many attributed the better-than-expected result to gasoline sales. But strength was broader. “Eight out of 13 categories posted increases, led by a 6.4% increase in the value of purchases at gas stations. While consumers pulled back on spending on things like hobbies and building materials, sales at furniture retailers, electronics stores and restaurants increased.” Those growthy categories show that while consumers are making substitutions as gas prices rise, they aren’t cutting discretionary spending full stop. If folks were tightening their belts across the board, why did restaurant and large-ticket item (i.e., furniture) spending climb last month? We don’t dismiss higher gasoline spending’s pinching discretionary categories. But tighter budgets don’t necessarily mean reduced spending, either. American households are faring better than many appreciate.