The Rise and Fall of Retail Sales in the Rise of Inflation: Evidence from New Year’s Low-Spending Consumer Confidence

Spending fell in November, the biggest drop in almost a year. And for once, lower prices and sales seem to be part of the story.

All this happened as inflation appeared to slow down. The prices of gas, furniture and appliances have been decreasing. In November stores also pushed big sales — on clothes, TVs, computers and smartphones — as they faced a persistent glut of inventory.

The Fed factor says the November report indicates that consumers feel the pinch of high inflation and interest rate hikes from the central bank. The retail sales data suggests that consumers are becoming more cautious with their spending.

Of course, many people have also tightened their shopping budgets in response to inflation. Stores like Walmart and Target, for example, say they have watched shoppers pull back from discretionary items, like clothes and home decor while they spent more on necessities, like food and gas.

Premarket Stocks Trading: A Negative Sign for the Recovery of the First-Criteria Economic Inflationary Result from Supermarket Data

A version of this story first appeared in CNN Business’ Before the Bell newsletter. Is not a subscriber? You can sign up right here. You can listen to an audio version of the newsletter by clicking the same link.

Weaker-than-expected retail sales in November pummeled market sentiment on Thursday and raised the odds that the Federal Reserve’s inflation-fighting interest rate hikes would push the economy into recession.

That’s a bad sign for the economy. Brian Moynihan, CEO of Bank of America, said last month that the US consumers are nearly unstoppable in staving off the recession. The last two months of the year are the primary time for retailers to sell goods, and they account for 20% of all retail sales.

The weak report means that spending fell just as the holiday shopping season started, a critical time for retailers to ramp up profits and purge excess inventory. Investors weren’t too happy about that.

Target shares fell by 3.2%, Macy’s shares fell by 3.5%, and the shares of ANF fell by 6.2%.

Amazon, Home Depot, and Walmart are the top three holdings of the VanEck Retail exchange traded fund, which fell as a result. All of the S&P retail stocks were down.

“The headwinds of the past year are catching up to consumers and forcing them to be more conservative in their holiday shopping this winter,” warned Morgan Stanley economist Ellen Zentner in a note.

Many families are resorting to credit to offset the burden of high prices as their savings are being used to sustain their spending. The current credit spree is a real risk to families at the lower end of the income spectrum since these trends are unsustainable.

American bank accounts are still robust and beginning to dwindle. In the third quarter of 2022, credit card balances jumped 15% year over year. That’s the largest annual jump since the New York Fed began keeping track of the data in 2004.

“Against this backdrop, we expect consumers will rein in their spending further in coming months,” said Daco and Boussour. “Real consumer spending should see modest growth in the final quarter of the year, but we expect it will barely grow in 2023.”

Source: https://www.cnn.com/2022/12/16/investing/premarket-stocks-trading/index.html

Freddie Mac Gets Into Better Business: Getting the Full Report on Chinese Companies’ Financial Statements in the U.S. Stock Exchanges

The 30-year fixed-rate mortgage averaged 6.31% in the week ending December 15, down from 6.33% the week before, according to Freddie Mac. A year ago, the 30-year fixed rate was 3.12%, reports my colleague Anna Bahney.

“Mortgage rates continued their downward trajectory this week, as softer inflation data and a modest shift in the Federal Reserve’s monetary policy reverberated through the economy,” said Sam Khater, Freddie Mac’s chief economist.

“The good news for the housing market is that recent declines in rates have led to a stabilization in purchase demand,” he added. In regards to affordability hurdles that are still quite high, the good news is that demand remains weak.

American regulators have been granted unprecedented access to the full audits of Chinese companies like Alibaba

            (BABA) and JD.com

            (JD) after threatening to kick the tech giants off US stock exchanges if they did not receive the data.

The announcement marks a major breakthrough in a yearslong standoff over how Chinese companies listed on Wall Street should be regulated. Laura He reports it will come as a huge relief for investors and firms who have invested billions of dollars in them.

The chair of the Public Company Accounting Oversight Board said in a statement Thursday that it was the first time in history they could do full and thorough checks to root out potential problems and hold firms accountable.

More than 100 Chinese companies had been identified by the US securities regulator as facing delisting in 2024 if they did not hand over the audits of their financial statements.

There are more than 260 Chinese companies listed on US stock exchanges, with a combined market capitalization of more than $770 billion, according to recent calculations posted by the US-China Economic and Security Review Commission.