Market Outlook: How a Little ‘Therapy’ Made Me More Bullish

When the going gets tough, the tough … go shopping.

a person standing in a shopping mall with a bag in their hand

Source: Shutterstock

You’ve probably heard that funny little twist on the old proverb, and this past weekend, that was me.

I decided it was time for a little retail therapy after being cooped up for the last eight months.

It feels good, right? We should enjoy the money we make.

I bought a few things, but more importantly, I discovered that I was not alone.

And if you know me at all, you know my mind immediately turned to investing opportunities …

Last Saturday, I headed down I-95 from Baltimore to the Northern Virginia suburbs of Washington, D.C. I wanted to go to Tyson’s Corner, which has high-end shopping malls that include some of my favorite stories, like Saks Fifth Avenue.

And, yes, I admit it. I like Gucci stores.

People have commented on my Gucci sneakers, and I know they’re a waste of money. But they give me pleasure, and I don’t do a whole lot of frivolous spending. Besides, I work hard for my money, and think I deserve to enjoy it when I can.

So my retail therapy session took me to the Gucci store at Tyson’s Corner. It started by waiting in line for 20 minutes just to get in the store.

Once in, I struck up a conversation with the salesman helping me. (No surprise to those of you who know me.) I mentioned the long line just to get in the store, and he told me the line at the Chicago store sometimes goes all the way around the block.

And then came the real kicker. He said his regional manager had been in the week before, and she told him that Gucci is on pace for its best year ever.

That got my attention. I immediately looked into who owns Gucci, and the answer is Kering, a French company that specializes in luxury goods. The company trades on the Paris Stock Exchange and is also available here in the U.S. as an American Depositary Receipt (ADR) under the symbol PPRUY, so I looked it up. Here’s what I saw:

It’s at an all-time high.

So next, I wanted to look more broadly at retail. I pulled up the S&P Retail ETF SPDR (NYSEARCA:XRT), and guess what I saw …

Another new all-time high.

I think this is going to be a memorable holiday shopping season. It could be gangbusters.

People have been out less and spent less for the last eight months, and that means there is a lot of pent-up consumer demand right now.

Wanting to spend is different than being able to spend, which brings me to something I’ve mentioned before but nobody else is talking about:

There is a record amount of cash in U.S. checking accounts right now. And there is a record amount of cash in U.S. savings accounts right now. Both spiked to all-time highs after the first round of stimulus make its way to folks.

I think it’s great people saved some money, and I hope they invested some as well.

But we know some of that money is going to get spent, and more money is on the way. The media focuses on the disagreements in Congress over another stimulus package, but I would be shocked if it doesn’t get done.

Plus, I expect a Biden administration to pass an infrastructure/clean energy bill, which will inject tons of money and create tons of jobs. I hope all of this happens soon for the sake of those who are unemployed or underemployed.

All of this will likely pump trillions of dollars into the economy. And with the vaccine news so encouraging, I expect American consumers to do what they do best — spend and drive economic growth.

With Black Friday just a week away, I now think this holiday shopping season is going to be much better than most people expect. It could be the best ever.

And with more money coming down the pike, I look for an economic and stock market boom in 2021 and beyond.

On the date of publication, Matthew McCall did not have (either directly or indirectly) any positions in the securities mentioned in this article.

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