11.27.23: Student Loan Payment Has Little Effect on Spending??

For Public Readers: Weekly Key U.S. and China brief market notes by Larry Cheung's Analyst Staff Team for our Public Email List

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Nov 27, 2023

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In our emails, we will provide the following coverage points:

Brief Overview of U.S. & China Markets
Macro Chart in Focus
U.S. & China Upcoming Economic Calendar
Chart That Caught Our Eye

U.S and China Markets Brief Snapshot 🇺🇸 🇨🇳

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S&P 500 Index: 4559.34

KWEB (Chinese Internet) ETF: $28.56

Analyst Team Note:
“Despite what feels like a big jump in sentiment recently, data still points to convictionless equity bears (except for Tech/AI love). Pension equity weights are at 25-yr lows, sell-side market targets are mostly underwater, consensus long-term earnings growth for the S&P 500 is at its lows (ex. COVID), and active funds are hugging their benchmarks. Bull markets typically end with high conviction and euphoria - we are far from that.” - Bank of America

Macro Chart In Focus

Analyst Team Note:
Recent data from Fidelity Investments reveals that Americans are increasingly tapping into their retirement savings to manage financial pressures, primarily for housing and medical expenses.
In the last quarter, 2.3% of workers took a hardship withdrawal, a rise from 1.8% the previous year, mainly to avoid foreclosure or eviction and to cover medical costs.
Additionally, the proportion of 401(k) participants taking loans against their accounts increased to 2.8% from 2.4% in the same period last year.
About 17.6% of workers currently have an outstanding loan against their 401(k), and the average 401(k) balance has dropped to $107,700, indicating a slight decrease from the previous quarter.

Upcoming Economic Calendar

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U.S Economic Calendar (Upcoming Data Points)

China Economic Calendar (Upcoming Data Points)

Analyst Team Note:
The end of the student loan moratorium has raised questions about its impact on consumer spending.
Data from Bank of America indicates a significant increase in the number of households making student loan (SL) repayments in October, with the count doubling from September but still 25% lower than January 2020 levels.
Analysis of spending patterns of households making their first SL payment in 2023 reveals no apparent adverse impact on their spending compared to other groups.