Retail Sales Jump 5.3%, U.S. PPI Posts Largest Gain Since 2009, and Conflicting Signals from Gold and Copper
February 19, 2021 | FIRESIDE CHARTS
Though the economic situation in the U.S. is improving overall, unemployment remains a major concern; jobless claims just hit their highest level in four weeks and initial benefits claims are inching closer to the 1.5 million mark. Retail sales surprised with a 5.3% jump in January—the largest jump in seven months—though we’re wondering if it’s a sustainable trend or more the product of the December stimulus checks and post-holiday bargain shopping. And PPI readings are climbing in the U.S., both broadly and in many key sectors, as potential early signs of looming inflation begin to accumulate. Gold and “Dr. Copper” meanwhile are sending conflicting signals on equities as investors remain torn on exactly where we currently fall in the market cycle. What could treasury yields have to say on the matter?
1. Unfortunately, new unemployment claims continue at elevated levels as affected businesses can’t hang on anymore.
Source: The Daily Shot, from 2/19/21
2. Fortunately, the overall economy is resuming its recovery…
Source: Oxford Economics, from 2/19/21
3. January retail sales were much stronger than predicted. You can see the Covid-induced, stay-at-home outfitting trend continue…
Source: Oxford Economics/ Haver Analytics, from 2/18/21
4. Commodity price increases are showing up in the producer price index. This is still below the Fed’s 2%+ target.
Source: The Daily Shot, from 2/18/21
5. Global weather issues, higher energy and fertilizer costs are driving grain (feedstock) prices higher which in turn will increase meat prices…
Source: The Daily Shot, from 2/18/21
6. Housing demand, both new and renovation, are driving costs higher:
Source: The Daily Shot, from 2/18/21
7. Have Americans already forgotten the lessons of the GFC or are these mostly paying for all the Covid-induced home improvements?
Source: New York Fed Consumer Credit Panel, from 2/19/21
8. Relative size is not the issue we face. As the charts above show, the “Covid-Factor” has split our economy into those in need and those who are fine. Shouldn’t the stimulus focus on those in need?
Source: The Daily Shot, from 2/19/21
9. This chart almost looks like a Covid chart. Will the third wave end like the first two?
Source: The Daily Shot, from 2/18/21
10. What is “Dr. Copper” telling us? (along with the other industrial metals…)
Source: The Daily Shot, from 2/19/21
11. Gold, however, is telling a different story:
Source: The Daily Shot, from 2/19/21
12. Who is right is likely going to be determined by bond yields. As the risk-free rate of return climbs, stock valuation models look less attractive.
Source: The Daily Shot, from 2/19/21
13. Based on online search activity, many of your clients are increasingly aware of rising rates. As the 60/40 type models come under more return pressure, what to do? Give us a call and we can show you how we might help…
Source: The Daily Shot, from 2/19/21
14. “Top and pop” or will the trend power through?
Source: Bloomberg, from 2/18/21
15. What’s $285 trillion amongst friends? Put another way, every person on the planet owes ~$37,000…
Source: The Daily Shot, from 2/18/21
Disclosure: The charts and infographics contained in this blog are typically based on data obtained from 3rd parties and are believed to be accurate. The commentary included is the opinion of the author and subject to change at any time. Any reference to specific securities or investments are for illustrative purposes only and are not intended as investment advice nor are they a recommendation to take any action. Individual securities mentioned may be held in client accounts. Past performance is no guarantee of future results.