ooof ... but wait, there's LESS (revisions?)

ReSale TALES recaps and victory laps

Well, once again living up to its name (it’s EARNED IT over the years), ReSale Tales does NOT disappoint.

For those looking for a surprise (one way or another) now have something to write about, explaining how / why it is DEMAND is NOT over.

The doom and gloomers will be out suggesting XMAS was pulled forward and are already canceling 2022 and consumption is ruined unless there’s more stimmy (CTC not YET a drag on spending THEY SAY … anyone, anyone?) ...

We will continue to deal with bottlenecks and bare shelves in as far as narrative stick saves and whatever you THINK you think, you can be right in the short run. The data simply far too impaired for ANY narrative to be declared victor, IMO.

The market will decide who it feels is correct. I’ll lean on the WEEKLY closes for that ‘tell’ and share (best I can) if anything pops up.

For now, some of the EARLY ReSale Tales recaps and victory laps (ie whatever you do, DON’T WORRY…).

ZH: US Retail Sales Tumble Most Since February As Web Revenues Crash

1030a Swonk SAYS: COVID & Inflation Prompt Pullback

Bottom Line: The health of the economy is ultimately dependent upon the health of the population. The Federal Reserve has concluded that variants are more inflationary than disinflationary. The only silver lining is that Omicron tends to descend as rapidly as it ascends.

1030a Goldilocks: Retail Sales Decline Sharply; Import Prices Edge Down

BOTTOM LINE: Retail sales and core retail sales both decreased by more than expected in December—likely reflecting the high hurdle for sequential growth on a seasonal basis since pre-holiday spending was very elevated—and core retail sales growth was revised down for November. Import prices decreased against consensus expectations for an increase, reflecting a pullback in fuel prices. Following today’s import price data, we left our month-on-month December core PCE estimate at +0.40%, and increased our month-on-month headline PCE estimates to +0.37% and +5.72%, respectively. This morning’s large retail sales miss indicated downside to our Q4 consumption and GDP tracking estimates, though we believe the implications for Q1 are limited. We will update our tracking estimates after the mid-morning data.

1030a NWM,

… More importantly, it now appears that Q1(22) spending will really struggle (even more than we thought) to get off the ground from a statistical platform perspective, given the reported weakness in spending as the year came to a close.  Also, some spending will likely be held down by some fallout from Omicron, particularly on categories such as restaurants, travel-related, etc...In any case, we have penciled in no growth in spending (0.0%q/q, ar) for now in Q1 (versus an earlier +1.5%q/q, ar estimate), and would not rule out a slight decline for the quarter as a whole. While we suspect spending to gain momentum as we move through Q1, as potential downside impacts from Omicron hopefully fade, today's especially sharp drop digs a deep hole for spending to climb out of in early 2022. Thus, we are trimming our Q1 GDP projection from a previous 2.5%q/q, ar of growth to just 1.0% (Q2 we still show a rebound to around 3 1/2%). 

BMO: Retail Sales Ended 2021 Weaker than Anticipated

Retail Sales in December disappointed at -1.9% MoM vs. +0.2% Nov and -0.1% consensus. The Control Group was sharply lower at -3.1% MoM vs. -0.5% Nov and 0.0% anticipated. Ex autos and gas the move was -2.5% vs. -0.2% forecast. Overall, an underwhelming print that was accompanied by downward revisions to November. This will further erode Q4 growth estimates, however the official Fed stance (as reflected in the December SEP) remains that this is consumption delayed into 2022 rather than a more significant impact to the trajectory of spending. Import prices in December came in well below expectations at -0.2% MoM vs. 0.2% MoM seen and Nov's 0.7% MoM read - a moderation of inflation as last year drew to a close. Ex-petro the figure also underwhelmed at 0.3% MoM vs. 0.6% MoM expected and 0.7% MoM prior, demonstrating the influence of moderating energy prices. By no means a game changer, but also not adding further to the inflationary angst.

Brean: Retail sales were much weaker than expected, dropping 1.9% in December,

Retail sales were much weaker than expected, dropping 1.9% in December, as sales at non-store retailers--which includes e-commerce--dropped 8.7%. Weakness was broad based. Retail sales excluding autos, building materials and gasoline (the control group) dropped 3.1% in December. Supply disruptions are likely an important factor here. In unadjusted terms, retail sales rose 10.0% in December. However, once seasonally adjusted, sales fell 1.9%. Census used the same seasonal factor in 2021 as they did in 2020. However, if consumers shopped early for the holidays to get ahead of supply problems, sales earlier in the quarter would have been boosted at the expense of December. Retail sales rose an average of 1.0% per month in October and November, which is the strongest gain for those two months in eleven years. This was followed by a weak (in seasonally adjusted terms) December. We wouldn't read this report as a signal of weakening consumer demand.

Oxford Economics (so is written with a British accent), via twitter

930a, WFC Retail Sales Plunged in December, Don't Panic

A broad-based decline across various store types resulted in a sharp 1.9% drop in retail sales for December. We see today's cratering in retail sales more as a reflection of early shopping and pulled-forward demand than an Omicron impact or a seminal change in consumer activity. Inflation will be a bigger headwind for consumers than COVID in 2022.

Um, so I’m assuming WFC (and the rest) will tell us precisely WHEN to panic? Hopefully?

932a, MS (Zentner & Co): The Pull Back

… Coming into the retail sales report, we were tracking +4.6% annualized growth in real PCE in 4Q21 and real GDP at +7.0%, with elevated PCE inflation widening the gap between real and nominal PCE. Incorporating today's retail sales release and our higher PCE inflation forecast for December (+0.4%M), we lower our real PCE tracking to 2.6% and we lower real GDP tracking to 5.3%, with consumption providing a 1.7pp contribution to GDP … Consumer spending grew in only 2/13 categories in December, compared with 10/13 categories in November … Core retail sales (retail sales & food services excluding autos, gas, and building materials), which enters into our quarterly consumption tracking, was well below our forecast (+0.8%M), decreasing 2.7%M, with November downwardly revised 50bp to -0.4%. Control retail sales, further excluding food services, decreased 3.1%M with November revised down 40bp to -0.5% … The downside surprise in retail sales reflected weakened consumer sentiment due to high inflation as well as the impact of Omicron

In any case and in OTHER news, how about them IMPORT PRICES - so a proxy of ‘flation in some way / shape / form, buried by the lead. From Brean (Ryding)

… Import prices were below expectations falling 0.2% in the month but rising 10.4% on a year-over-year basis. Excluding fuels, import prices rose 0.3% in the month and the year-over-year increase edged up tp 6.4% in December from 6.3%. Prices of petroleum products fell 6.0% in the month as crude oil prices dropped 9.4% in December versus November on WTI. But from mid-December to mid January crude prices are up 16.6% so this drop in import prices will be short-lived.

Check back (refresh this post) later for more funtertaining recaps as they become available … For now, though, (still)watching FV vs 119-29 …

Turns out that earlier update (with red arrow) HERE wasn’t so bad after all?