This week we received advanced retail sales for the month of July. From mine, this is one of the more important data points – as it sheds light on what we see with the relative health of the consumer. With spending making up 70% of GDP – any signs of slowing serve as a warning. Advanced retail sales accelerated 1.08% on the month – adjusted for seasonality but not inflation. Economists had been looking for a 0.3% increase MoM. However, June sales were revised to a decline of 0.2% after initially being reported as flat. As regular readers will know, it’s virtually impossible to glean anything from a nominal data point when viewed month-over-month. And whilst the media (and stock market) could not get over how ‘strong’ the data was – I would warn against jumping to conclusions.
Fed Reserve
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Fear & Greed
Wall St. is driven by just two emotions: fear and greed. Pending on the degree to which you succumb to these emotions – it will have a profound impact on your bottom line. All too often, most investors will do two things: (i) buy when there is market greed; and (ii) sell when there is fear. It’s the opposite of what you should do. However, this is something you need to master if you are to be successful in the game of asset speculation.
Powell’s Ready to Cut… And Not Just Once
Today Fed Chair Powell delivered precisely what the market wanted to hear… help is on the way. As a perpetual (closet) dove – Powell did his best to stay balanced however the cat is now out of the bag. Rate cuts are coming. And there will be more than one. Consistent with other meetings – Powell said rate cuts are an option if economic data continues on its current path. In other words, it was the (same) scripted “data dependent” Fed.
However, there were some important nuances.