December 1, 2022

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Inflation be damned, consumers are shopping their way through it: Morning Brief

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Thursday, February 17, 2022

Inflation everywhere, but ‘depressed’ public shops through it

Power Twitter users might be familiar with the catchphrase “tweeting through it.” Loosely defined, it’s a state of ignoring a crisis (one most likely of your own making) by posting about other things as a means of idle distraction.

After January’s blockbuster retail sales data, perhaps it’s time to concoct a new saying: “Shopping through it.” Because quite frankly, how else to describe Wednesday’s impossibly hot figures? The retail numbers arrived amidst widespread angst about inflation — which, as we’ve mentioned at least a few times in the Morning Brief, consumers have become inured to absorbing.

Indeed, last month’s data showed the world’s largest economy literally eating higher prices, with the Omicron wave exerting only a marginal impact on demand for food and drinks. Elsewhere, strong auto sales, and the consumer’s penchant for shopping online during the COVID-19 era, gave the figures a potent ballast.

“It’s definitely a big surprise,” Refinitiv director of consumer research Jharonne Martis told Yahoo Finance Live this week. “Online sales was the big winner here, and that is key because it shows us that the pandemic is still on consumers’ minds.”

Just like tweeting through it, U.S. consumers are apparently shopping their way through soaring prices in spite of all the odds, including gas prices that are on the rise because of oil (being driven higher by geopolitical tensions). The wizened investing sage Charlie Munger, who spoke to Yahoo Finance Editor in Chief Andy Serwer on Wednesday, is of the mind that inflation “is the way democracies die.”

At least for now, consumers appear to be postponing the day of reckoning by buying virtually everything in sight, with near-reckless abandon. January retail data suggests there’s still some upside surprises left for first quarter growth in an economy that continues to defy gravity in multiple ways.

The spending figures were enough for Wall Street veteran Chris Rupkey at FWDBONDS to suggest only half-jokingly that “depressed consumers flood[ed] the malls” in January, even though sentiment indicators show citizens are glum about relentless inflation and other factors.

In fact, there’s another indicator that hints at consumers embracing shopping and “self-care” as a means of escaping the painful realities of our increasingly expensive era. With air travel soaring, Airbnb (ABNB) is something of a barometer of people’s willingness to travel, if their barn-burner fourth quarter earnings are any indication.

“The simplest comment is, travelers are gonna travel,” KeyBanc Capital Markets equity research analyst Justin Patterson says about the affect of people returning to travel on Airbnb. “We have two years of really pent up travel demand here.”

The “pent-up” concept of consumers aggressively spending to compensate for time lost during the pandemic is a powerful force-multiplier. And it also recalls something the Morning Brief has noted in the past: It’s not what consumers say, but what they do (sort of like polling voter intentions that overstate or understate support for candidates) that ultimately matters.

By Javier E. David, editor at Yahoo Finance. Follow him at @Teflongeek

What to watch today

Economy

  • 8:30 a.m. ET: Housing starts, January (1.695 million expected, 1.702 million in December)

  • 8:30 a.m. ET: Housing starts, month-over-month, January (-0.4% expected, 1.4% in December)

  • 8:30 a.m. ET: Building permits, January (1.750 million expected, 1.873 million in December, upwardly revised to 1.885 million)

  • 8:30 a.m. ET: Building permits, month-over-month, January (-7.2% expected, 9.1% in December, upwardly revised to 9.8%)

  • 8:30 a.m. ET: Initial jobless claims, week ended Feb. 12 (218,000 expected, 223,000 during prior week)

  • 8:30 a.m. ET: Continuing claims, week ended Feb. 5 (1.605 million during prior week)

  • 8:30 a.m. ET: Philadelphia Fed Business Outlook Index, February (20.0 expected, 23.2 in January)

Earnings

Pre-market

  • 7:00 a.m. ET: Walmart (WMT) is expected to report adjusted earnings of $1.51 per share on revenue of $151.68 billion

  • US Foods (USFD) is expected to report adjusted earnings of $0.40 per share on revenue of $7.64 billion

  • Palantir Technologies (PLTR) is expected to report adjusted earnings of $0.03 per share on revenue of $419.33 million

  • AutoNation (AN) is expected to report adjusted earnings of $5.00 per share on revenue of $6.37 billion

Post-market

  • Shake Shack (SHAK) is expected to report an adjusted loss of $0.17 per share on revenue of $202.60 million

  • Roku (ROKU) is expected to report adjusted earnings of $0.04 per share on revenue of $893.13 million

  • Dropbox (DBX) is expected to report adjusted earnings of $0.37 per share on revenue of $558.33 billion

Politics

  • President Biden is headed to Ohio this afternoon to talk about infrastructure. He will visit Cleveland and Lorain to discuss money flowing towards roads and bridges, water systems, and environmental efforts.

  • On Capitol Hill, Sens. Bernie Sanders and Elizabeth Warren will appear at a hearing on “Wall Street Greed” at 11:00 a.m. ET. Sanders said he invited the CEOs of BlackRock, Blackstone, and Apollo Global Management (Yahoo Finance’s parent company) to the hearing but all declined to testify.

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