Our question of the day is the shopping Cart half full or half empty and what Happens if all of the treasury curve Stays above four percent the FED keeps Hiking we're going to ask Anastasia Amoroso I Capital Chief investment Strategist Anastasia you can answer that Question from say a market retail stock Point of view and then an Eco point of View I'll answer it from the economic point Of view and I do think that the card is Half full Alex and the reason I say that Looking at the latest retail sales Numbers for example we had some blowout Numbers in some particular categories if You look at restaurants if you look at Leisure and if you look at Travel if you Look at Autos those are all the Categories that are doing really well What's probably not doing well is Anything that's been tied to the Pandemic Home Improvement Trend it may Be just your basic you know day-to-day Shopping so but for the other way to Think about this the consumer is able to Stomach this five percent raise economy And there's a few reasons for that first Of all you look at the unemployment rate At 3.4 percent consumers are employed And they're more gainfully employed Potentially as they were last year wages Are still rising at 4.6 percent so You've got jobs you've got wages and
Then guess what you've got a lot more Household Network that has been created Over the last 14 years and sure we gave A little bit of that back some of it Back I should say last year but if you Look at U.S household net worth it is Still a multiple a factor of what it was Before the pandemic or back in you know In during the financial crisis and then Cash There's 17 trillion dollars of cash On household balance sheets and guess What that cash is not yielding zero now It's yielding close to five percent so You put all those things together and I Do think that consumers do have the Discretionary spending power and it Might actually improve a little bit this Year as inflation comes down but wage Growth Still Remains sticky There is an argument that says Anastasia That as rates go higher the consumer Spends more because as you say the cash That they have on hand is is getting a Better yield is that really the case What yield do you think the FED has to Deliver here will break the consumer Yeah I don't think it's five percent guy Because you know if you look at five Percent if you look at the core PC Inflation we're just looking at real Rates still being right around zero so That is not enough to sort of Choke off The growth in the economy I do think we Have to start talking about six six and
A half percent rates until you really Get into this restrictive territory that Might get the consumer and might Dent The corporates and of course we're not There yet and I think at some point the FED will likely have a rethink of what Is the right level of restrictive policy I don't think that point is imminent I Don't think it's in March but especially As we get into the back half of the year And I think it's likely to become Evident that inflation is not yet on Track to two percent and in fact it Might start to pick back up in the Second half of the year I think that's When the FED will kind of wake up to This and say six and a half percent rate Is probably the next destination but That's probably not the imminent stop Right now
