September 16, 2021
Retail sales numbers came in much hotter than expected this morning.
This continues the unprecedented performance of retail sales coming out of recession. Remember we talked about this last June, on the back on comments from the great macro trader Stanley Druckenmiller.
Druckenmiller had pointed out that the speed at which the pandemic-induced losses in retail sales were recovered were something "we've never seen" before. It took only five months to recover. By comparison, it took almost four years to recover the retail sales losses from the Great Financial Crisis.
Moreover, not only did retail sales quickly recover losses, but the index continues to run well above trend growth (extrapolated out from pre-pandemic levels).
Simply put, the consumer is consuming at well above trend levels. And the August data is yet another point to confirm that strength.
With the above in mind, the markets are coming to grips with the reality that the Fed will indeed begin the end of emergency policies. That means the timeline to announce the taper of asset purchases is/should be well intact. They should announce the plan at next week's meeting (September 22nd).
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