Latest / Markets with Megan: A Quick Financial Markets Update / Retail and Manufacturing Rebound? | S3 E133 | 04-01-26

Transcript

Retail and Manufacturing Rebound? | S3 E133 | 04-01-26 · Markets with Megan: A Quick Financial Markets Update

• 0:00
  Megan Horneman: The consumer and manufacturing are some bright spots in the economy today.
• 0:05
  Megan Horneman: It is Wednesday, April the 1st, and this is Markets with Megan.
• 0:08
  Megan Horneman: If you like this podcast, you can subscribe, hit the alarm bell, share with your friends, family, or colleagues.
• 0:14
  Megan Horneman: But we want to go through the economic data that we receive on a regular basis.
• 0:18
  Megan Horneman: What does it mean for the economy?
• 0:20
  Megan Horneman: And then what is it doing to the markets?
• 0:22
  Megan Horneman: Is are the markets reacting to this data that we're seeing?
• 0:25
  Megan Horneman: This morning we got two pretty big pieces of information.
• 0:28
  Megan Horneman: First is on the consumer, and the other is on manufacturing.
• 0:31
  Megan Horneman: Now let's dig into the consumer first.
• 0:34
  Megan Horneman: Keep in mind that this data is as of February, so it does not reflect the Iran war as of yet.
• 0:41
  Megan Horneman: But retail sales came in better than expected at all different levels.
• 0:45
  Megan Horneman: The headline had its biggest increase, as you can see from autos, gas, and building materials.
• 0:51
  Megan Horneman: They did increase quite a bit.
• 0:53
  Megan Horneman: But when you strip those out, we did have a little bit of a downgrade to the January data, excluding those items, but February rose the most in four months.
• 1:02
  Megan Horneman: This is what we can we call the control group.
• 1:05
  Megan Horneman: It strips out those volatile items like autos, gas, building materials, food.
• 1:10
  Megan Horneman: We saw broad-based gains in this core number.
• 1:13
  Megan Horneman: It was led by health care and personal care, clothing, sporting goods, and electronics.
• 1:19
  Megan Horneman: We also watch a proprietary discretionary spending model that we keep.
• 1:24
  Megan Horneman: And it looks at all of those items that we consider discretionary.
• 1:27
  Megan Horneman: Things like spending at restaurants, internet, department stores, clothing, electronics, furnitures, autos.
• 1:35
  Megan Horneman: We saw the biggest jump in this indicator on a year-over-year basis that we've seen in five months.
• 1:40
  Megan Horneman: It was up 5%.
• 1:42
  Megan Horneman: Now, like I mentioned, this is before the Iran war.
• 1:46
  Megan Horneman: And these numbers are not adjusted for inflation.
• 1:48
  Megan Horneman: So that's important to remember because some of these items like clothing, furniture, electronics, we're not sure how much of that's being impacted by the tariffs or the or um the tariff that were the tariffs that are still being paid through through February.
• 2:04
  Megan Horneman: We will not be able to get that data until we we really get some of these inflation-adjusted indicators.
• 2:10
  Megan Horneman: But what this is telling us is that consumer spending was still solid in February.
• 2:15
  Megan Horneman: So it's holding first quarter GDP together.
• 2:19
  Megan Horneman: Now, when we look at manufacturing, manufacturing had been in recession for so long, but we did see that it did rise a little bit again in March.
• 2:28
  Megan Horneman: So we are seeing this now.
• 2:29
  Megan Horneman: I'm getting data that does reflect the IRAM war.
• 2:33
  Megan Horneman: It was the best increase that we've seen since August of the best level we've seen since August of 2022.
• 2:40
  Megan Horneman: And over the past two months, this ISM manufacturing indicator has seen the biggest rise in almost a decade.
• 2:48
  Megan Horneman: Now, in this indicator, though, we are starting to see some impacts from the war because this is March's data.
• 2:55
  Megan Horneman: Delivery times, they rose to the highest since May of 2022.
• 3:00
  Megan Horneman: Prices paid.
• 3:02
  Megan Horneman: This is important because this jumped to the highest level since June of 2022.
• 3:07
  Megan Horneman: The delivery times, you know, we're taking a close look at because remember the Strait of Hormous is not just about transporting energy.
• 3:15
  Megan Horneman: It also transports things like aluminum, helium, fertilizer, fertilizer, many of these things that keep the economy going, but also especially our big components in semiconductors.
• 3:27
  Megan Horneman: So this is concerning that we may see some supply chain disruptions as we get data that fully reflect the war that we've been in.
• 3:36
  Megan Horneman: Now, what are these two indicators tell us?
• 3:39
  Megan Horneman: Again, the Fed's probably not gonna do anything anytime soon.
• 3:42
  Megan Horneman: This is something we should be concerned about with inflation, specifically in the manufacturing, but then also in retail sales are some of these numbers higher because of um higher prices.
• 3:54
  Megan Horneman: So the Fed's gonna stay put.
• 3:55
  Megan Horneman: We still are in the camp that the Fed's not gonna be able to do anything this year, that inflation is still one of the bigger risks.
• 4:02
  Megan Horneman: We're not necessarily saying that they're gonna hike rates yet, but we do think that they'll be on hold.
• 4:07
  Megan Horneman: That's all we have on the economic data today.
• 4:10
  Megan Horneman: If you want a history of our podcast, you can go to marketswithmegan.fm.
• 4:13
  Megan Horneman: Thank you.