Retail Takes a Hit, Housing and Manufacturing Moderate, and the Delta Variant Reawakens Shutdown Concerns
August 18, 2021 | FIRESIDE CHARTS
Retail sales slid -1.1% in July amid rising concerns over the Delta Variant and a broader shift toward spending on services, contributing to the major indices moving off highs yesterday to close in the red. In more signs of a cooling (re: normalizing) housing market, new homes sales and building permit issuance have both slowed. Rents are another story though… Meanwhile, the Empire State Manufacturing survey shows moderating activity in factories, but no accompanying moderation in prices received. Is this a sign that inflation could be less “transitory” than initially thought? Looking globally, Covid cases are rising with ~4.5 million new cases per week in what looks to be a distinct third wave as the Delta Variant continues to run rampant. New Zealand has entered another lockdown and China has closed its ports, disrupting container shipping on a global scale and reigniting fears of another worldwide shutdown. Monday saw the S&P 500® Index officially double off its pandemic bottom in just 354 trading days—could surging cases and new shutdowns disrupt momentum?
1. July retail sales actually declined 1.1% in July as normalization in goods sales (decreasing) gives way to an increase in services.
Source: Census Bureau, J.P. Morgan, from 8/18/21
2. The housing market is showing signs of normalization. Another sign of a return to the slow-growth mode?
Source: The Daily Shot, from 8/18/21
3. Rents, however, continue to surge. This will not bode well for the future CPI prints:
Source: The Daily Shot, from 8/18/21
4. Will normalization lead us back to the slow growth path? The first monthly Fed survey indicates so:
Source: The Daily Shot, from 8/17/21
5. So far, the inflation does not look transitory:
Source: The Daily Shot, from 8/17/21
6. Cumulative deficits still need to be repaid:
Source: Wall Street Journal, from 8/17/21
7. Both Bulls and Bears now occur with increasing speed:
Source: LPL Research, from 8/17/21
8. Are we in a pattern regime similar to 2017 or will the markets ruin this chart?
Source: The Daily Shot, from 8/18/21
9. Just like the flu pandemic after WWI, Covid is setting up at least three distinct waves. Globally, there are currently ~4.5 million new cases/week:
Source: JHU CSSE, as of 8/18/21
10. Covid is still driving the economic narrative:
Source: Reuters, from 8/18/21
11. While the Covid numbers from China are dubious at best, the Delta variant is causing port and other regional shutdowns which will further complicate global supply chain issues:
Source: The Daily Shot, from 8/18/21
12. Does China’s debt bubble have a posterchild similar to Lehman Brothers or Baer Sterns?
Source: Bloomberg, from 8/18/21
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.