QI TAKEAWAY — Oil breaking north of $100 should light up the energy patch. However, energy shock risk is not a friend to the broader stock market. Upper-income households are the biggest spenders and have the most to lose from extended stock price compression even as the Fed is forced to push ahead with tightening plans.
- QI’s Household Bull-Bear Tail Indicator, tracking the spread of year-ahead stock market expectations by UMich, fell to a net 12% in February; this was the least bullish read since the pandemic began, with those confident in stock market growth hitting a six-year low of 31%
- Per UMich, the median value of stock market investments for each third of income earners is $352,143, $83,750, and $31,250, respectively; benchmarking to January 2020, the top have had gains of $104,000, the bottom third saw no change and the middle saw a $15,000 drop
- The Atlanta Fed’s GDPNow forecast for Q1 2022 is now at 0.0% and Markit’s Q1 estimate has fallen from 1.3% to 1%; while oil hitting $100 should be a boon for shale producers, this could also spawn a counter-acting wealth-effect reversal among upper income consumers