As we embrace the holiday season, it's impossible to overlook a profound cultural shift that has rapidly evolved in recent years, which may be the unexpected gift the stock market has been yearning for, states Bill Baruch of

Recollections of the 90s holiday season, filled with mall trips and family outings, feel like distant memories in today's consumer landscape. The days of mall excursions are nearly gone, replaced by a year-round shopping experience where almost anything can be ordered and delivered within 24 hours. And consumers have not held back when it comes to spending. While the expenditure on goods has defied forecasts of economic headwinds, it's the spending on services that has emerged as the unstoppable force.

The vitality of the modern consumer is apparent, and my recent travels to various cities—Boston, NYC, Chicago, Miami, Dallas, and more in just the past six weeks – underscored the influence of corporate events on consumer spending. Companies, in their quest to ensure employee satisfaction, have been inundating their workforce with happy hours, parties, events, and conferences. Surprisingly, investing in such corporate gatherings often proves more cost-effective for businesses than dealing with employee turnover, replacements, and retraining.

It extends even further, as very few individuals limit themselves to just the company-sponsored event; there are pre-event drinks, post-event dinners, and much more, especially when events entail travel. The result of all this exuberant spending throughout the year is that consumers now yearn for tranquility, to cocoon with their families while replenishing both their spirits and wallets.

The tradition of hectic mall visits, store-to-store shopping sprees, and overspending on the perfect gifts seems like a bygone era. Many gifts are secured well before the Black Friday rush, marking a substantial shift in consumer behavior. We believe this cultural transition will artificially slow the economy at a strategically opportune moment.

When examining recent leading indicators, it becomes evident that the consumer is reaching a point of fatigue. Disposable incomes are shrinking, as average hourly earnings reflect the lowest levels seen since March of 2021. Lower disposable income has weakened confidence, setting the stage for reduced spending and weaker economic growth in the near future. The services sector has defied expectations, remaining robust throughout the year and contributing significantly to sustained inflation levels, a concern highlighted by the Federal Reserve.

Visa's CEO emphasized, "We're not economic forecasters," and expressed optimism, assuming no recession at a macro level and not factoring in the potential impacts of rising inflation and student loan repayments. The Retail Sales data for November and December over the last two years has already been reflective of this evolving holiday spending trend.

While predictions of an economic slowdown have lingered throughout the year, there is a sense that some economic indicators might signal a shift, attributing it to factors such as rising student loans, mounting credit card debt, or the next domino to fall due to inflation. Regardless of the label assigned to it, we believe this shift will be relatively short-lived, though impactful enough to alter the rate trajectory.

Currently, the ten-year yield has exceeded 5%, its highest level since July 2007, introducing a significant headwind to the risk environment. Q3 GDP figures show an increase of 4.9%, more than consensus estimates of 4.3% - a figure persistently on the high side. However, the Atlanta Fed GDPNow model had an even more optimistic projection of 5.4%. Concerns arise for Q4, which could dip below 2%, especially if compounded by the holiday consumer slowdown. This leads us to believe the ten-year yield could retreat to the 4% handle.

What does all of this signify? This economic deceleration may be a timely blessing for the Federal Reserve. It might not only induce an official pause in their rate-hiking endeavors but also set the stage for discussions about potential rate cuts. We believe this presents a substantial opportunity in owning tech stocks. We would love the opportunity to engage in a conversation to strategize this for you.

Learn more about Bill Baruch at Blue Line Futures.