Kris gives an update on our domestic economy, labor market, second quarter earnings and consumer spending.
Transcript:
Hi. My name's Kris Venezia. I'm an advisor at Eckman Wealth Management. Today, I’m going to be talking to you about earnings. We're in the heart of earnings season. I think the first thing we were certainly paying attention to was on the labor side — what's happening in the labor market. We know the labor market is extremely tight. Are there any clues as you flip through some of the commentary as to what's happening in the labor market?
I think the biggest takeaway, the broadest takeaway is businesses are saying it's getting easier to hire. They’re also saying there's less turnover, which coincides with some of the statistics you start to see. So good news there on the labor side, certainly saying easier to hire, you know, employers able to retain employees.
I think the one nugget I kind of pull is I like to look at Domino's. You know, they've talked a lot about having a tough time hiring delivery drivers. They've said they've had an easier time hiring delivery drivers, you know, trying to meet that demand they have for delivery drivers, but that's getting easier for them. They're holding on to more of their their workforce both in the kitchen and with delivery drivers. So certainly good news in the labor market there. Good trends emerging there.
I think the other thing we look for as we're looking through this earning season is just on the consumer. What's happening with the consumer? We know the consumer has held up surprisingly well. I'll call it surprisingly well. We continue to get commentary, whether it be from banks, card companies, we continue to get commentary that the consumer is holding up extremely well.
And the biggest thing looking at the service side is just the consumer’s been spending so much on experiences, restaurants, hotels, cruises, gambling, casinos. That trend has continued. What's interesting to me, too, is if you look especially through the airlines and cruises, they're continuing to see bookings go farther out. American Express has a lot of data on consumer trends with restaurants and airlines. They own one of the reservation platforms called Resy. You know, they noted the same thing, continuing to see people going out to eat, continuing to bookings extending out into the fall and even maybe a little bit into the winter.
So consumer still spending a lot, still prioritizing experience as opposed to goods, buying physical things like, you know, refrigerators. Consumers largely did that a lot in 2021. Some of those stimulus checks, you know, not going back, you know, PCs, electronics, even apparel is a little weak in some categories. But in terms of experiences, we're still seeing a consumer that wants to get out and wants to spend money.
The trend that has emerged in this earning season — MasterCard, Visa really hit on it a lot.
Airlines hit on it, too. — It's just international. Consumers when it comes to travel in the U.S. are starting to prioritize international travel, which is a difference as opposed to really heavy domestic. You know, you're starting to see more and more people choose to fly abroad, vacation abroad. So a little bit of a change in where the consumer's traveling as they travel. We look at these earnings reports.
So broadly, I think the things are first, you know, earnings relatively intact. Certainly you're always going to have pockets in areas. Texas Instruments, to me, stood out as one that was a little weak or Microsoft - investors a little disgruntled, I’d say with AI. I think there was an expectation from investors that AI would have a larger impact faster than Microsoft is saying it's going to. So some selling pressure on Microsoft.
But largely and broadly, you're seeing most of these companies come out, beat expectations and even in some cases, you know, I'd say like big tech like Meta, Alphabet, which is Google, you know, really starting to see even some growth in some areas. As you as you look at those two companies.