The Australian retail sales print tells us what we already knew from the credit card spending data, namely that lockdowns have caused consumers to sharply decrease expenditures.
Even if you feel that the high levels (as opposed to monthly rates of change) are sufficient to justify a good enough operational outlook, the valuations of most industrials / consumer discretionary / retail provide little compensation in exchange, in our view.
As such we remain happily underweight the sector. Policy support remains generous, as it was with Jobkeeper, however more recent measures are designed to keep employees whole, rather than going via the conduit of the employer first. This results in a lower potential for profiteering, and a greater chance of being saved by the consumer, rather than being spent.
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