Aus retail sales

We need the “its over / we’re back” meme for the Aussie retail sales data, just to cover the monthly!

October was a bit below consensus, coming in at ~-0.2%, vs +0.1% expected. Some give back from the stronger than expected prior month was anticipated, although this overshot modestly to the downside.

I’ll be honest, it is clear as mud if you try to take it month by month.

Stepping back, and using “eyeball econometrics” there’s a reasonably clear downtrend to the numbers over the past year, and this intuitively makes sense given the cash rate (and expectations for future hikes) has moved from 0% to ~4.5%.

We’ve also got newish phenomena like Black Friday and Cyber Monday sales, that make seasonal adjustments harder to do, and trend extrapolation (divination) harder.

Either way, our view is to avoid the retailers. I think it’ll be a challenging Christmas, and if November prints poorly I think we’ll see the retailers sell off quite hard.

Equally, if November winds up printing well, next month, it’ll be “were back, Mortimer”, in the mind of the market, and retailers that we don’t own will probably do well.

That’s the trade.

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