Consumers Don’t Like What They See?

If the consumer is in worse shape than last month, we can only imagine how bad the retail sales report will be. We're all assuming the stimulus will have a tiny factor on spending this month. If the money goes out on Monday, that gives consumers 3 days to spend it this month.  

Don’t worry about this weakness. The vaccines are going out quickly. I expect weak data in January and then a sharp improvement starting in the spring. Interestingly, the last two Georgia Senate polls have the Dems up 5% and 7% which is much different from the last 3 sets of polls. That makes this race more of a toss-up. The polls are wildly different. We are 2 weeks from the election. If the Dems win, another stimulus could be passed.

High-Frequency Data Showing Issues

There's some credibility in calling for a recovery next year because there may likely be a slowdown from the 2nd half of November through January. If the data stays very weak in March, you can call that wrong. It’s not that much of a prediction because obviously when the virus goes away, activity will recover. That’s why stocks haven’t reacted much to the weakness seen in the chart below.

For example, Zoom stock is still down 28% from its recent peak. It would be down more if the high frequency data didn’t show mobility is cratering, but it’s not close to its high. Don’t trade this economic and COVID-19 data like you did in the spring and summer. It’s being viewed as temporary, which most would agree with.

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