Morning Report: Retail Sales rise while consumer sentiment falls

Vital Statistics:

  Last Change
S&P futures 4,448 19.2
Oil (WTI) 82.13 0.39
10 year government bond yield   1.57%
30 year fixed rate mortgage   3.22%

Stocks are higher this morning as good numbers are being reported by the banks. Bonds and MBS are down.


Retail Sales rose 0.7% MOM, which was well above the consensus. Ex-vehicles and gas, they rose 0.7% as well. This report covers the back-to-school shopping season, which is a good indicator of what the holiday season will look like. That said, we have no problem with demand right now, the problem is supply. Higher gas prices were a big factor in the increase, as they are up 38% YOY.

“Services spending may see some renewed strength over the next couple of months, as virus cases continue to drop back,” Capital Economics senior U.S. economist Andrew Hunter wrote. “But with goods shortages likely to persist, and the resulting surge in prices eating into real incomes, we expect consumption growth to remain subdued.”


The supply issues are also evident in import and export prices. Import prices rose 9.2% on a YOY basis, while export prices rose 16%.


Jerome Powell is still expected to be re-nominated to run the Fed, however he is getting some pushback from the hard left, particularly Elizabeth Warren. If he isn’t the nominee, Lael Brainard, who was nominated by Barack Obama, seems to be the next best bet. Brainard is considered more dovish than Powell, however that probably doesn’t matter all that much – after all the FOMC is a committee and decisions are usually arrived by consensus and voting.

“You could see a different path of monetary policy with a Brainard-led Fed” that pushes back initial interest rate hikes and follows with a shorter tightening cycle, said Paul Herbert, Managing Director at Harbor Capital Advisors, who expects Powell to be renominated but is preparing to hold shorter duration bonds for longer in the case of a Brainard-led Fed.


Consumer sentiment slipped in October, according to the University of Michigan Consumer Sentiment Survey. The numbers are well below September’s numbers and October 2020’s. The survey blames the debate in DC over the stimulus bill and the debt ceiling, but IMO that stuff probably doesn’t resonate with the typical US citizen.

If you look at consumer sentiment surveys historically, they have historically correlated (negatively) with gasoline prices, and I suspect that is what is driving the numbers. If gas prices rise, people’s mood sours. That said, the Delta variant of COVID is probably playing a part too.

30 Responses

  1. I love this


    • I finally looked this up and figured out what it was. The circle will be complete when someone actually gets Biden himself to say it.


    • Or the circle will be complete when the police arrests someone, or the Secret Service investigates someone, for saying “Let’s go Brandon”. Runner-up prize for any Twitter account that gets banned, or if YouTube starts demonetizing anyone saying “Let’s go Brandon”.


  2. Perfect:

    “Instead Of Kryptonite, New LGBTQ+ Superman Will Be Crippled By Anyone Using Wrong Pronouns”


    • … And at the same time, they’ve made sure that Superman no longer fights for the American way. Boy, they are getting stuff done over at DC.

      Superman was outdated in 1938 when America was in the throes of the Great Depression and a new war loomed large. Superman was outdated in the ‘70s when his movie arrived in the era of Vietnam and Watergate. He was outdated in the ‘80s, the ‘90s, and throughout the War on Terror. He is outdated now, when the “American way” stands for income inequality, for-profit prisons, the politicization of medical science, the militarization of police against Black and brown communities, and entertaining false conspiracy theories as “balanced views.”

      I generally agree Ace’s take on New Gay Superman:

      I collected comics in the 1980s, but was basically done by 1990. So I got out well before this new era, but if I hadn’t I have no doubt I’d be getting out now.


  3. RIP Colin Powell.


  4. If true, an interesting twist to the French submarine sale to Australia story:

    “If French officials cooperated with the FBI on this matter, it must have been particularly galling when the Biden administration then struck a deal to share nuclear technology with Australia, thus squelching a contract that France had negotiated long ago. This is the same nuclear technology that the Toebbes thought they were providing to France. If France had taken the Toebbes up on their offer, it might have been able to save the contract with Australia. Instead, the French notified the FBI—and for their trouble, they got screwed. This may be the backstory on why French President Emmanuel Macron was particularly peeved.”


    • This comment really encapsulates Progressive thinking,

      Oct 18, 2021 at 01:26:29 PM
      Yeah, but letting one President be King for four years, completely toasting the entire nation, but then refuse to use “King’s Power” to restore balance because the mythical ‘high road’ is more important? Naw, Biden has a nice WIDE berth to use Executive Orders under the constant obstruction in Congress. That is 110% why Executive Orders exist. When Congress is UNABLE to agree on a piece of legislation, the President can step in and settle the matter with an Executive Order. So….yeah…Biden can wield that power and put Man-Chin in his place.

      “but…the courts!”

      Let’em use the courts. Executive Orders are in full effect until otherwise stated.


  5. Sometimes you have to restate the obvious:

    “A tip: Believe Joe Manchin when he speaks

    Good Tuesday morning. Eighty-four days ago, Sen. Joe Manchin (D-W.Va.) laid out in a memo to Senate Majority Leader Chuck Schumer why he was only willing to support a reconciliation bill worth up to $1.5 trillion, less than half of what Democrats called for in their $3.5 trillion budget resolution. Manchin voted for the resolution two weeks after he and Schumer signed the now-famous memo.

    Yet even before that, Manchin had spent months telling reporters in the Capitol that he …

    → … wasn’t willing to spend much more than $1.5 trillion.

    → … believes vital programs like Medicare and Social Security are in danger of insolvency and wants to save them rather than expanding them.

    → … supports means testing on government programs, as he showed during last-minute negotiations over the $1.9 trillion American Rescue Plan in March.

    → … was opposed to the Democrats’ clean energy plans.

    Manchin has been remarkably consistent, and all the major media outlets have reported it time and time again. If you’re surprised by what Manchin is saying now, maybe you’ve been really busy, tied up on other endeavors and haven’t listened to or read what he’s said. That’s understandable. Life moves pretty fast.

    But if you have listened to Manchin and you’re still surprised by or enraged at his positions, that may be because you’re irrationally hopeful he will change his beliefs, or you’re engaging in wishful and likely unrealistic thinking. Maybe you’re just listening to what you want to hear. But don’t worry, you aren’t alone. Half of official Washington has decided that they’re going to ignore what Manchin says and believe he has a secret set of beliefs he’s waiting to unveil.

    Here’s what you have to understand about Manchin: He says what he means. When he gets heavy pressure from the left, it helps him back home.

    Here’s the reality: Joe Manchin is a filibuster-supporting conservative Democrat who is also an ardent supporter of coal, skeptical of big government and massive spending packages. He never pretends otherwise. Let’s all stop acting surprised when he says the same thing for the umpteenth time.”


  6. Peak Biden:

    “Rachel Levine, openly transgender health official, to be sworn in as four-star admiral”


    • The amount of national attention that is paid to the trans community is simply astounding.


      • Reading the piece it’s clear that this was something that the administration wanted to promote in the press, not something that the reporters just stumbled across.

        What I find most interesting from that is what it says about the administration’s current priorities.

        And your point is exactly what Chappelle was pointing out and got pilloried for it in progressive Twitter and the press.


    • Politics has always been somewhat performative but now it seems to be nothing but performance. This is the kabuki theater and favor-currying symbolism of Trump, just from the left side of the aisle.


  7. Good read.

    “The Problem With How Democrats Are Selling Their Agenda

    By pitching their program as a safety net, Democrats risk alienating the very people they’re hoping to help.

    10/19/2021 04:30 AM EDT”

    Edit: Original 2017 piece in the NYT.


    • Working-class Americans rebelled against globalization and elected Donald Trump, who promised to fix it by bringing the factories back, slapping tariffs on Chinese goods, kicking out undocumented immigrants who are working for low pay and getting rid of pesky regulations that make it more expensive to run a factory in the United States. He didn’t fix it, of course. But he is beloved by tens of millions of blue-collar voters for trying.

      The left is completely oblivious to how they come across. Trump was not just about trade, Trump was anti-woke and that was a big part of his appeal. The left fundamentally doesn’t like the working class, and it shows. Who the hell wants to be led by people who don’t like them in the first place?


      • Yeah, it’s still written by a NYT writer, but the actual quotes from the subjects were interesting, especially their views of the whole “free college” approach as a racket designed to benefit universities and professors, not themselves.


      • He was unashamedly pro American as well, a la Reagan who was the last President, before Trump, to embrace American First!-ism.


      • Also, they don’t like manufacturing either as it supposedly impacts the environment.


      • They are, but they are insulated by a lot of casual, low-information voters who still think the Republicans are the censorious, oppressive folks, mostly Baptists who want to outlaw birth control and sex. So they imagine they are voting for some other set of ideas when they vote.

        Then they live inside their own bubble that gives them the idea that every real person agrees with them and only dummies have anything critical to say about their ideas. Control of entertainment and the media helps.

        But as Malcolm Gladwell observed a long time ago there are frequently tipping points and folks are often utterly unaware of that fact until one is reached. And a lot of ideological enablers are only that because that’s the fashion—if the cultural tied moves against them, they will be rapidly abandoned. I feel like a lot of corporations are woke because that’s the fashion right now, and they will stop trying to virtue signal the minute holding White Fragility seminars is no longer the thing to do.


      • BTW, I just had a short vacation in Horseshoe Bend, Arkansas. Very rural area. Lots of Trump signs. Several I wished I could get a picture of. Someone bought twin billboards that said “Trump Won” on one of them and “Biden Cheated” on the other.

        Not to mention all the things like the “Farm & Home” store. I love rural America. I would very much like to retire to rural America.

        These people don’t matter and may as well not exist to the elite politicians and media. But they are the best people to be around in my experience.


  8. This is a must read:

    “”The Bidens”: Is the First Family Corrupt, or Merely Crazy?

    Politico reporter Ben Schreckinger’s new book is an equal opportunity offender that may push a reluctant national media to re-examine ugly questions about President Joe Biden

    Matt Taibbi”


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