The Markets
Is the economy doing well, or not?
If you skimmed the headlines last week, you may have seen that retail sales – the purchases we make from stores in-person or online – declined 1.9 percent in December. The statistic may have raised questions about the strength of the economy. After all, how could retail sales move lower during the holiday season?
Media headlines speculated that the spread of the Omicron variant, rising inflation, and consumer grumpiness were to blame. Economists had other ideas, according to Logan Moore and Megan Cassella of Barron’s. “Consumers had long been expected to pull forward their holiday shopping to get ahead of any supply chain backlogs, economists say.”
As you think back on when you did your holiday shopping, there is another important question to ask: What time frame does the 1.9 percent capture?
The retail sales report showed that sales were:
- Down 1.9 percent month-to-month (comparing November 2021 to December 2021)
- Up 16.9 percent year-to-year (comparing the month December 2020 to the month of December 2021)
- Up 19.3 percent for the year (comparing 2020 retail sales to 2021 retail sales)
So, back to the original question: is the economy doing well, or not?
If you are judging based on retail sales – or any other piece of economic data – your conclusion is likely to depend on the time frame the data reflect.
For instance, if retail sales are down 1.9 percent from November to December, it tells a different story than if retail sales are up 19.3 percent for the year. The story may also be affected by the fact that 2021’s retail sales gain built on 2020’s gain. Retail sales rose 3.1 percent from 2019 to 2020, despite the pandemic.
Of course, the story of the dip in month-to-month numbers could be that we are at an inflection point. Barron’s reported, “While the December report showed an unexpected drop in retail sales from the catapult in spending November data showed, the slowdown is expected to be short-lived. Put more simply: ‘Don’t panic’…”
Last week, major U.S. stock indices moved lower, reported Ben Levisohn of Barron’s.
Data as of 1/14/22 | 1-Week | Y-T-D | 1-Year | 3-Year | 5-Year | 10-Year |
---|---|---|---|---|---|---|
Standard & Poor’s 500 (Domestic Stocks) | -0.3% | -2.2% | 22.9% | 21.8% | 15.5% | 13.7% |
Dow Jones Global ex-U.S. | 0.9% | 0.3% | 2.1% | 9.8% | 6.9% | 5.0% |
10-year Treasury Note (Yield Only) | 1.8% | N/A | 1.1% | 2.7% | 2.3% | 1.9% |
Gold (per ounce) | 1.7% | 0.2% | -1.0% | 12.1% | 8.7% | 1.1% |
Bloomberg Commodity Index | 2.2% | 4.4% | 27.5% | 9.0% | 3.1% | -3.1% |
IT’S A BEAUTY REVOLUTION!
Many caretakers have experienced that jolting realization: It’s too quiet! Where are the children? Then, a discovery that leaves them uncertain whether to yell, laugh, or cry. The kids have hijacked a makeup bag and given themselves – and the room – a new look. Sparkling shadow on cheekbones. Lip paint on toenails and eyebrows. Brown, red, blue, and green streaks on every surface. Palettes of cosmetics ruined.
A new trend in beauty may change this childhood rite of passage: virtual makeup.
The coronavirus has made cosmetic counters far less enticing than they once were, a change in circumstance that led beauty companies to develop new strategies for delivering personalized beauty experiences, reports Jennifer Kingson of Axios.
Beauty companies are teaming up with technology firms that specialize in artificial intelligence (AI) and augmented reality (AR) to develop apps that let people try on makeup virtually, according to Daniela Morosini of Vogue Business.
“In recent years, activity in the beauty [mergers and acquisitions] sector was often focused on larger cosmetic conglomerates buying up indie beauty brands. Now, the pendulum is swinging towards Silicon Valley – a tech ‘arms race’ is underway.”
The trend isn’t limited to makeup. One fragrance and cosmetics firm acquired a company with technology that interprets fragrances through images and patterns of colors.7
“Customers love playing with these apps so much that companies see big revenue boosts after introducing them,” reported Axios.
The new technology may change the way people shop for makeup, fragrance, and other beauty products. It also may put an end to childhood makeup-bag raids. Children will be able to experiment all they want, sitting in front of a screen.
Then again, maybe not.
Weekly Focus – Think About It
“The most beautiful people we have known are those who have known defeat, known suffering, known struggle, known loss, and have found their way out of the depths. These persons have an appreciation, a sensitivity, and an understanding of life that fills them with compassion, gentleness, and a deep loving concern. Beautiful people do not just happen.”
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* These views are those of Carson Group Coaching, and not the presenting Representative or the Representative’s Broker/Dealer, and should not be construed as investment advice.
* This newsletter was prepared by Carson Group Coaching. Carson Group Coaching is not affiliated with the named broker/dealer.
* Government bonds and Treasury Bills are guaranteed by the U.S. government as to the timely payment of principal and interest and, if held to maturity, offer a fixed rate of return and fixed principal value. However, the value of fund shares is not guaranteed and will fluctuate.
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* All indexes referenced are unmanaged. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.
* The Dow Jones Global ex-U.S. Index covers approximately 95% of the market capitalization of the 45 developed and emerging countries included in the Index.
* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.
* Gold represents the afternoon gold price as reported by the London Bullion Market Association. The gold price is set twice daily by the London Gold Fixing Company at 10:30 and 15:00 and is expressed in U.S. dollars per fine troy ounce.
* The Bloomberg Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.
* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.
* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.
* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.
* Past performance does not guarantee future results. Investing involves risk, including loss of principal.
* You cannot invest directly in an index.
* Stock investing involves risk including loss of principal.
* Consult your financial professional before making any investment decision.
Sources:
https://www.census.gov/retail/marts/www/marts_current.pdf
https://resources.carsongroup.com/hubfs/WMC-Source/2022/01172022_Retail%20Sales%20Report%20Screenshot_2.pdf
https://www.barrons.com/articles/us-retail-sales-december-51642118411?mod=hp_LEAD_3&mod=article_inline
https://www.census.gov/newsroom/press-releases/2022/annual-retail-trade-survey.html
https://www.barrons.com/articles/stock-market-earnings-season-federal-reserve-51642208912?refsec=the-trader
https://www.axios.com/the-beauty-business-turns-to-augmented-reality-22256e51-1158-4db9-8d8e-5fc26b550191.html
https://www.voguebusiness.com/beauty/inside-the-beauty-industrys-newest-power-play-tech-acquisitions
https://www.goodreads.com/quotes/tag/beauty