B.I.G. Tips – Retail Sales Stall

May 14, 2021

After a couple of days of much stronger than expected inflation data, the trend of higher than expected readings didn’t continue with Friday’s Retail Sales report. While economists were expecting sales to increase by 1.0% versus March, the actual level was unchanged. After subtracting Autos and Gas, the report was even weaker showing a decline of 0.8%. While the April report was a disappointment, it wasn’t all bad; March’s report was revised higher by nearly the same amount that April’s report missed expectations by.

Since the outset of the COVID pandemic, there have really been some crazy swings in economic data.  One example is the total share of Retail Sales that Food & Beverage Stores account for.  Prior to COVID, the sector’s share of total sales had been slowly drifting lower over time in the low-double-digit percentage range.  The COVID lockdowns really changed that, though.  Over the course of a month from February to March 2020, the sector’s share of total sales spiked from just over 12% to more than 17%.  Obviously, Americans weren’t suddenly eating more (at least not that much more), but with the economy locked down, they literally couldn’t spend money on anything but the essentials like food, liquor, and lottery tickets.  Additionally, for the food they did eat, they were forced to buy it at the grocery store rather than at restaurants.

As the lockdowns ended and Americans were able to spend again, the sector’s share of total sales started to decline again.  While a reversion back down to its baseline level was expected, the sector now actually accounts for a lower percentage of total sales than it did before the pandemic!  Just as Americans weren’t necessarily eating more during the pandemic, they aren’t eating less now that the pandemic has ended.  The reason that the sector’s share of total sales has dropped below pre-pandemic levels is the exact opposite of why its share spiked so much during the pandemic.  Americans aren’t spending more or less on food now than they did before or during the pandemic, but instead, the pie is a lot larger now (thanks to savings and stimulus) and they are choosing to spend that food money at restaurants and takeout rather than at the grocery store.

In our just-released B.I.G. Tips report, we broke out the details of the April report including its bright and dark spots. For anyone with more than a passing interest in how the COVID outbreak and subsequent stimulus is impacting the economy, our monthly update on retail sales is a must-read.  To see the report, sign up for a monthly Bespoke Premium membership now!

VIX Spikes

May 13, 2021

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B.I.G. Tips – Lay of the Land

May 3, 2021

Heading into the fifth month of 2021, one thing for sure this year is that it has been a lot calmer than last year. The S&P 500 closed out April in the midst of one of its narrowest short-term trading ranges in months, and it occurred right in the thick of earnings season! Anyone who’s been disappointed with the price action so far this year either has too much cash or is just plain greedy. The 4,200 level has been a short-term area of resistance for the S&P 500, though, and while it’s broken above that level in early trading today, we would wait until the close of trading for confirmation of the breakout.

Every sector is up so far YTD, and they’re all above their 50-DMAs. Ironically, sectors that have lagged like Consumer Staples and Utilities are still both overbought, while Energy, the best performing sector YTD, is barely above its 50-DMA. Along with Technology, which was one of just two sectors down last week, the Energy sector’s timing score ranks as ‘Good’.

Market rallies are always fun if you’re long equities, but with many groups trading at or near 52-week highs, risk/reward isn’t necessarily as attractive. Even in overbought markets, though, there are always opportunities.

In our just-released B.I.G. Tips report, we’ve provided an update to our “Lay of the Land” report which summarizes the performance and chart patterns of every S&P 500 Industry over the last year. For anyone looking for a snapshot of where things stand from a technical perspective heading into the crucial month of May, this report is a must-read.  To see the report, sign up for a monthly Bespoke Premium membership now!