It All Comes Down to the American Consumer

With about a $100 billion more in market cap than competitor Mastercard (and a few hundred billion more than American Express), Visa (V, on the updated quarterly chart, below) is still squarely on my radar to flag a major inflection point and, indeed, regime change for the vaunted American consumer. 

As you know, America's economy still revolves around the relentless consumer, spending and borrowing as far as the eye can see. In fact, it is hard to believe that America used to be known as nation which celebrated thrift and tinkering, considering now we are known for excess consumerism. And speaking as someone who has lived in Europe previously, it is a well-deserved reputation. 

Regardless of how the CPI print and reaction play out tomorrow, headed into autumn I still maintain the view that the market will begin to discount a deeper consumer slowdown into 2023. 

It has been a long time coming, but with this summer almost out of the way, all of those pent-up demand splurges after the pandemic will finally have exhausted themselves. And we will be left with sticky high inflation amid a slowing economy (jobs are a lagging indicator). 

Visa's epic run, in hindsight, telegraphed the go-go days of last decade and mostly since the March 2009 lows. Thus, once Visa loses $200 again I expect the market to aggressively reprice a new regime with a surprisingly more fickle consumer amid higher rates and inflation at-large, particularly once the weather gets chilly again.