Daily update
Daily update
- Retail sales dominate, and there seems no reason abandon the hedonism of the US consumer. Lower income US households are more constrained, but middle income homeowners are living in a world of around 2% inflation (except in Florida) and have more spending firepower. The narrative has shifted. In 2022, consumers were spending the President Trump’s profligate unemployment payments and were relatively price insensitive. Today consumers are responding to evidence of price discounting.
- UK December consumer price inflation slowed less than expected as tobacco taxes increased, but producer prices showed more aggressive deflation than expected. Discounts under the dual pricing structure of UK supermarkets is not currently included in inflation calculations, meaning inflation reality is lower than reported.
- ECB President Lagarde is to speak today—twice. At least six other ECB members are fighting for media attention (and there are two Fed speakers). Markets now seem to react more to policy expectations than to economic details, so this babble of noise requires some attention.
- China’s 2023 GDP beat the official target—China’s growth targets exist for the purpose of being beaten. Market interest lies in 2024, and both the level and composition of growth. It is China’s propensity to import that matters to investors focused on other economies.