Market Domination host Josh Lipton is joined by Yahoo Finance senior reporter Allie Canal to break down BlackRock and Bank of America’s latest commentary on the K-shaped economy and stock market.
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00:00 Speaker A
the K-shaped economy is a hot theme, a hot trend. What did you hear there?
00:03 Speaker B
Yeah, I mean BlackRock described it. It’s K-shaped everything, right? We have a K-shaped stock market where you have equities tilted towards tech. You have a K-shaped economy where you have these higher income consumers boosting growth while the lower income consumer is struggling. And I asked Bank of America specifically about this and their economist, uh Aditya uh Bave, he told me that the two can’t coexist forever.
00:23 Speaker B
At some point, you’re going to have something break. However, B of A is pretty optimistic. They see GDP growth uh going to 2.4% and part of that view is that the bottom of the K is going to stabilize before the top of the K collapses. and and that’s really underpinning that more optimistic view there.
00:43 Speaker B
But what he did say that was interesting is even though a K-shaped economy is not necessarily sustainable, what do consumers spend the most money on? Services. Would you say the higher income consumer spends on services or the lower income consumer spends on services? It’s actually the higher income consumer. So if we continue to see spending on services, that could prop up that area of the labor market and that could maybe make up for some of the softness that we’ve seen there.
01:08 Speaker B
So even though a lot of the soft data, a lot of the survey data has been a little bit pessimistic uh about the state of the economy and in particular the labor market, there are still things to like within this K-shape. So, a a really interesting uh conversations and Bank of America also said that they they do not see us entering any type of recession next year either.
