Dash any hopes about a "surprise" Jackson Hole announcement by the Fed. The reason: July retail sales posted the biggest beat to expectations, rising at 0.8% on expectations of a 0.3% increase, which was above the highest Wall Street estimate of 0.6%, and which despite the downward revision of June headline retail sales from -0.5% to -0.7%, means that the Fed will now be looking at the possibility of inflation rising as a result of increased consumer spending. Ex autos and gas, the increase in spending was +0.9%, on expectations of a 0.5% rise (prior revised from -0.2% to -0.4%). Was this spike in spending credit driven or not? This will be seen once the next personal savings and consumer credit report is out, but that won't happen until after Jackson Hole. So those who trade based on hope and prayer may be well-advised to shelve those two strategies for the next 3 weeks, especially since PPI rise 0.3%, on expectations of a 0.2% pick up following June's 0.1% increase: the biggest increase in 6 months.
All that said, the volatility in this series is getting quite ridiculous as can be seen on the chart below. Expect major revisions next month.
Some of the key categories responsible for this rise:
- Sporting goods: +1.6%,-1.2% last
- Non-store retailers: 1.5%, 0.2% last
- Furniture: +1.1%, 0.4% last
- Health and Personal care: +1.1%, -1.5% last
- Building Materials: 1.0%, -2.3% last
- Electronics: +0.9%, -1.1% last
- Clothing: 0.8%, 0.4% last