Why the K-shaped economy is 'worth' paying attention to

BMO Private Wealth chief market strategist, Carol Schleif, joins Morning Brief with Yahoo Finance Senior Reporter Allie Canal to discuss the K-shaped stock market's (^DJI, ^GSPC, ^IXIC) coinciding with the K-shaped economy and what it means for consumers.

To watch more expert insights and analysis on the latest market action, check out more Morning Brief.

Video Transcript

00:00 Speaker A

We have a K-shaped stock market and it's coinciding with a K-shaped economy with those higher income consumers driving a lot of the resilience that we've seen within the economy. How concerned are you of the link between the stock market gains to that higher income consumer and how that could potentially bleed through to some of the economic growth that we've been enjoying over the past few quarters?

00:23 Speaker B

Yeah, I think that is that is well, the K-shaped consumer and the K-shaped companies in the in the economy is definitely worth watching because you do as your earlier segments talked about with the consumer companies, you're definitely seeing strain on the lower part of of that K and demographically as well. And so it it bears watching because it impacts a lot of the consumer companies and you've seen it in some of the earnings reports where you've got a lot of frontline consumer companies that understand how how fraught consumers are with the higher level of prices they're paying now versus five or six years ago.

01:04 Speaker B

and you touched on this autos are expensive, homes are expensive, education, that there there's just a lot of things going in making it tougher that that lower side and they're staying supremely value conscious, but they're also making choices in terms of if they may not travel, you know, as extensively, but they'll do stay patients close to home.

01:25 Speaker B

They may not spend up on certain things, but they'll they'll divert some place else. But the higher end consumer as long as housing values and stock markets they tend to be, their spending tends to be much more tied to things like that as opposed to employment concerns or or things like that. and even with the pullback in here, we suspect that when you look at overall net income and values that that top tier owns, it's it's grown substantially in the last few years, not just in the US but globally as well.

View Comments