weekly market update 4/26/2024

After suffering its worst week of the year, the S&P 500 bounced back with its best weekly return since October 2023 as first quarter (Q1) earnings results were solid and Friday’s inflation report, the PCE, came in better than feared. Thursday’s preliminary Q1 GDP report did briefly spook markets and evoke fears of “stagflation”, or stagnant economic growth coinciding with persistent inflation, but those fears ebbed as investors realized that the average US GDP growth for the last four quarters is 3%, a level that is the envy of every other developed country.  Friday’s PCE did come in hotter than expected, but fortunately the downtrend in core inflation remained intact and investors breathed a sigh of relief heading into the weekend.  Next week the Q1 earnings season continues, headlined by Apple and Amazon, and investors will be keying on next Friday’s jobs report for April.

PAWN SHOP INVENTORY IS BOOMING

While the overall US consumer has remained very resilient, it is becoming increasingly clear that lower income households are having a tough time.  This week the largest publicly traded pawnshop company in the US with 1,200 domestic locations, FirstCash Holdings, reported earnings and noted record “pawn receivables”, up 14% from a year ago.  EZCorp, the second largest US pawn shop operator, reports earnings next week but has highlighted similar dynamics.  Demand for short-term cash loans is extremely high and coupled with the price of gold reaching all-time highs, consumers are very actively pawning their belongings.

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder

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