Inflation and Consumer Spending: A Deep Dive into the Current Economic Landscape

Joining me this morning to weigh in is Neil McDonald, CEO of moomoo US.

Neil, great to have you here.

Thank you so much.

Thank you, thank you very much.

So an exciting day today.

We have Nvidia post close and it's a really strange market.

You have the consumer doing badly.

You have inflation, you have the 10 year at 465, the 30 years you mentioned, but earnings.

Companies are doing great, so everybody who's beat.

It's the best earnings season for 3 or 4 years.

Nvidia after the close will be the bellwether, certainly for retail clients who are big owners and big fans of Nvidia.

So we have a function on the platform which shows what the implied move is going to be from the options market and what it actually is.

And historically the options. of overpriced the move.

You have to go back to Q1 2025 for the actual move to reflect what the options market is priced in.

So as of this morning, it's pricing in just under 12% for the Straddle.

So that's 232 on the upside, 208 on the downside.

That's what the option is implying for what could happen after the close today.

And Neil, apparently there's such a thing as Nvidia watch parties that are taking place across the country, so that is an interesting concept here.

But I do want to take a step back and look at what's happening around the globe when it comes to bond markets.

You mentioned that elevated yield, but where are your concerns, especially as we pay attention to what's happening in terms of Fed fund futures?

So I mean we'll see what happens with Kevin today.

So I I saw some commentary yesterday, some people are saying a rate hike by July, Goldman Sachs saying nothing until year end.

I think we're in that flux moment.

I think I think the new Fed chair will be under pressure to keep rates low, that's kind of been his intention, but the global bond markets are saying something else.

You had South Korea calling a meeting today about their FX market intervention.

Japanese yields growing at very, very high levels and the bond market doesn't care about politics.

The bond market.

Do we see 470 and then does it run to 5 and I think it starts to move that way it's not about people getting the yield, it's about how far can it run. and we continue to monitor those yields as we head into the rest of the week, of course, but when it comes to the macro environment here you mentioned the retailer we did get a handful of earnings out from retailers including Target, TJX as well and this comes on the heels of Home Depot yesterday.

But when we're talking about costs for American consumers, especially as summer driving season does kick off with Memorial Day right around the corner where are your concerns for the US economy.

Yeah, I mean it's it's going to really impact people going forward.

I think inflation happens slowly and then all of a sudden, right, so we're seeing it at Target, we're seeing it in your grocery bill, you definitely see it for driving season.

I was trying to book flights over the weekend to go to Europe.

Very inflated levels.

Lufthansa dropped 20,000 flights.

We're seeing more European airlines dropping flights, so there's a squeeze on the consumer both for people vacationing, for people saying I'll stay in the states and I'll drive.

That's got expensive.

And then just groceries.

The problem with inflation is it slows, slow, and then it happens, and then it can be very sticky and very hard to bring down.

And I do want to shift our focus on back to the broader market because despite some of the gains that we've seen this year, there are still some concerns below the surface.

So when we take a look at the S&P 500, for example, the leaders versus the laggards, we are seeing this bifurcation here.

So what do you expect as we head into the second half and what are you seeing when it comes to trading on our clients they were very cautious around March at the start of the conflict in Iran.

But end of March onwards when there was a bit more clarity and nothing was really happening, they bought this rally.

So the rally from almost 25-30% from the end of March through until today has been driven a lot of retail buying.

So again it's dip buying, it's their favorite names.

It's Tesla, Nvidia, Micron, Dram.

We saw a huge amount of volume.

It came from nowhere to being a huge, huge ETF.

They're very focused on AI, very focused on chips.

We don't see people trading Home Depot.

We don't see people trading some oils, but certainly our client base is very tech forward, so they still love the names they love, love the names that have done well for them over the past 2 or 3 years.

We have seen some opportunistic coarse bred selling into the strength, but their core positions they're not selling.

Yes, it's really interesting you mentioned that.

We just spoke to Dave Matza from Round Hill about that ETF at the top of the show, but we are starting to hear some very bullish calls when it comes to price targets for the S&P 500.

But when we're looking at equities, commodities, even FX or other areas of the market.

What are your price targets as we head into the rest of the year.

So for me I think price targets is trying to be clairvoyant, right?

I mean the start of every year all the banks say that S&P target is X and they change them over the year.

I don't.

I don't put any weight behind price targets because it's just it's clairvoyance and we unfortunately don't have that as human beings.

I know it's a job that they do and it's nice to have a price target, but there are too many unknowns, too many variables, I think, to make really confident price target estimates.

Yeah, absolutely, unfortunately we do not have a crystal ball here, Neil, but thank you so much for your time today.

We will have to leave it there.

I appreciate your time and all of your insights.

Thank you very much.