April retail sales came in below expectations this morning, unchanged from March versus +1.0% expected following a 10.7% stimulus-boosted print last month. Core was even more disappointing, shedding 0.8% MoM. Strong increases were seen in cars and food services, with other “opening-up” categories such as clothing, sporting goods, and general merch tumbling sharply.
The annual data was, of course, very positive given where the country was a year ago. Perhaps the better way to evaluate it is by looking at the longer-term picture. Thanks to the stimulus payments, retail sales blew through the long-term trend in January and are just now settling back to trend.Of course, the pandemic drove a sharp increase in online sales – while retail employment dropped like a rock during the shutdowns. It has yet to come close to pre-pandemic levels and, given the general decline already underway since 2016, is unlikely to do so anytime soon.
The markets could care less about unemployment – focusing instead on the effects of trillions in stimulus and QE, the justification for which is said unemployment. If more people returned to work, the Fed would presumably trim back its support for the markets.
Futures backtested the red TL (erstwhile H&S neckline) overnight, primarily on the usual beatdown in VIX, which closed back below its SMA200 and gapped down below its SMA100 overnight. It’s off about 25% in the last 24 hours – a strong signal to the algos.
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