035: The Latest Retail Sales Report: Winners, Losers, and Future Sustainability 08-15-23

Ready to unravel the mysteries of the latest retail sales report? Buckle up, as I take you on a journey beneath the surface of these whopping numbers. We'll reveal the unexpected winners and losers, with sectors like autos, furniture, and electronics not quite riding the wave. But wait till you hear about the explosive growth of internet sales — all thanks to Amazon's Prime Day!

However, it's not all rosy, as we grapple with some hard-hitting questions about the potential sustainability of this consumer resilience. Will factors like higher gasoline prices, looming student loan repayments, and rising credit card debts be the straw that breaks the camel's back? Tune in as we also decipher the market's reaction to the report and its fear of an unending Federal Reserve tightening cycle. For all the investment enthusiasts out there, join me to gauge the market and the future possibilities. And always, feel free to reach out with your questions or comments at podcasts at verdence dot com. 

Hello, welcome to Markets with Megan. This is Megan Horneman and the Chief Investment Officer for Verdence Capital Advisors. We're here today to talk a little bit about the retail sales report that came out today. This is a monthly report that gives us an idea of consumer spending. There's really no way to get around this. The headline's going to say it was a great report and underneath it was a very good report from a spending perspective. Here it was autos, furniture, electronics. Those areas were weak, but the rest of the areas of the report were very strong. When you look at internet sales, that's all the biggest monthly jump, and that was primarily due to Amazon's Prime Day. The first of the two days for Amazon's Prime Day was their single biggest selling day ever on record. So there still is that argument that consumers remain resilient. What we think, though, going forward, is that the combination of higher gasoline prices, as well as the resumption of student loan payments and as well as the amount of credit card debt that is outstanding, we're not sure how long this resiliency can stay. The consumers have been more resilient than we have anticipated.

What the markets are doing today is selling off pretty substantially because of this news. The reason behind that is now. There's the thought that the Federal Reserve is not done with their tightening cycle. They're not going to like this report. This can be inflationary. We're going to take a close look at other spending metrics, especially inflation-adjusted spending, when we get that at the end of the month and then we'll get a better idea of what their path is. But equity markets are pricing in that the Fed is not done with their tightening cycle and we're seeing that in weakness today. If you have any questions or comments, please feel free to reach out to podcasts at verdence dot com. Thank you.