Latest / Markets with Megan: A Quick Financial Markets Update / Is Retail Data Misleading Investors? | S3 E146 | 05-14-26

Transcript

Is Retail Data Misleading Investors? | S3 E146 | 05-14-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: Consumers continue to spend despite all of the outside factors that are straining their budgets.
• 0:06
  Megan Horneman: This is uh Thursday, May the 14th, and this is Markets with Megan.
• 0:10
  Megan Horneman: If you like this podcast, you can subscribe, hit the alarm bell, share with your friends, family, colleagues, anybody who wants to dig into the economic data that we get on a regular basis and what it means for not only the markets but the economy.
• 0:23
  Megan Horneman: And today we got a report on the consumer and their spending patterns.
• 0:27
  Megan Horneman: This is the monthly retail sales report for the month of April.
• 0:31
  Megan Horneman: And in the month of April, we're here two months into the turmoil that's going on in the Middle East.
• 0:36
  Megan Horneman: Gasoline prices still remain very high, but yet retail sales numbers are relatively strong.
• 0:42
  Megan Horneman: Now, when we look at this data, the headline numbers came in as expected.
• 0:47
  Megan Horneman: It was all due to an increase in gasoline stations, more higher gasoline prices, more spending at gasoline stations.
• 0:54
  Megan Horneman: We did see, though, at the core level, what we call the control group.
• 0:58
  Megan Horneman: This is a this is an input into the GDP data that excludes things that are volatile.
• 1:04
  Megan Horneman: It excludes food, autos, gas, and building materials.
• 1:09
  Megan Horneman: That rose 5.5% for the month, which was a little bit better than expected, but it comes on the back of last month for the month of March when there was a slight upward revision to 0.8%.
• 1:21
  Megan Horneman: Now, when we dig into these details where that core spending laid, it was in electronics, sporting goods, internet shopping, and then restaurants.
• 1:31
  Megan Horneman: And on a year-over-year basis, this indicator is rising the most we've seen in eight months.
• 1:37
  Megan Horneman: Now, there's a couple things we want to highlight with this report.
• 1:40
  Megan Horneman: The most important thing is that this data is not inflation adjusted.
• 1:46
  Megan Horneman: And what we mean by that is if the month of April we saw higher prices on things like electronics or sporting goods because of the inflation pressures that are emerging due to the conflict in the Middle East, it won't show up in this data.
• 2:02
  Megan Horneman: It's just going to show up as a higher dollar amount.
• 2:04
  Megan Horneman: So we don't have a way of really deciphering between what amount of it was because the dollar amount was higher than the last month, and what was true pickup volume in spending on these categories.
• 2:17
  Megan Horneman: So we look at this report, the markets tend to really react on this report.
• 2:22
  Megan Horneman: Yes, it's positive, consumers are spending, but some of these components, take electronics, for example, we've already talked about that in the inflation reports, that we're seeing an uptick in electronic components in inflation because of semiconductors, and then the bottlenecks and log jam we have in the Strait of Hormouths.
• 2:40
  Megan Horneman: So that could be more inflation, more of a flat a factor of inflation than it could be in volume in spending.
• 2:47
  Megan Horneman: Same thing goes with restaurants.
• 2:49
  Megan Horneman: Is it that food prices is rest in restaurants is higher because we've talked about the fertilizer problem and the really record high numbers we're seeing in some fertilizers, what that means for food prices.
• 3:02
  Megan Horneman: So the market's taking this as a good report.
• 3:04
  Megan Horneman: Equities are higher.
• 3:06
  Megan Horneman: Um, it could have something to do with the retail sales, but equities are really higher today just on that AI trade.
• 3:12
  Megan Horneman: Again, this market continues to be very heavily focused on just AI.
• 3:16
  Megan Horneman: It is there's not a whole lot of breadth in the market, meaning that this is not a broad-based rally.
• 3:22
  Megan Horneman: This is really a tech rally.
• 3:23
  Megan Horneman: Um, this comes on Cisco, which uh jumped the most in 14 years, and that's because they announced a better sales forecast as well as some restructuring, which unfortunately does um come with some reduction in their workforce.
• 3:37
  Megan Horneman: But equities are liking it today, bond yields are also a little bit lower, and oil prices are relatively flat for the day, so it's better than what we've seen recently with big increases in energy prices.
• 3:49
  Megan Horneman: We'll see what that brings for us tomorrow.
• 3:51
  Megan Horneman: But that's all we have today.
• 3:52
  Megan Horneman: If you like this podcast, you go to marketswithmegan.fm.
• 3:55
  Megan Horneman: Thank you.