Aus macro/retail sales

And so it was, November gives way to a material negative across December, surprising the market to the downside.

Retail stocks have been bid (a relentless bid for some time now), but household cashflows (weaker) and mortgage rates (higher) will win out, I think.

Into the strong November sales, last month we wrote:

Revisiting this issue about Oct-Dec retail sales data given BF/CM [Black Friday/Cyber Monday]; it is simply very unlikely that retail sales are accelerating into the final stages of the rate cycle. Shopping around for “value” given COL [cost of living] pressures sounds odd, but strength it likely ain’t & thus Occam holds.

Occam is a reference to Occam’s razor, that it was simply a pull forward in sales due to seasonal promotion, and not a strengthening underlying consumer.

It will be a very interesting results season, for many of the consumer names. With year-on-year numbers like that of the below, someone has to be wearing it in the form of lower margin (i.e. wages are growing at 4%, total retail sales are growing at 1%).

The weakness does seem quite broad-based, but household goods and clothing seem to be the hardest hit.

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