To hell with inflation, consumers are buying their way through it: Morning Brief

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Thursday, February 17, 2022

Inflation everywhere, but “depressed” public stores through it

Power Twitter users may be familiar with the catchphrase “tweet through”. In a broad sense, it is a state of ignoring a crisis (probably of your own making) by posting other things as an unnecessary distraction.

After January’s blockbuster retail sales data, it may be time to concoct a new saying: “Shopping through it.” Because frankly, how else to describe Wednesday’s insanely hot numbers? The retail sales numbers came amid widespread anxiety about inflation – which, as we mentioned at least a few times in the Morning Brief, consumers have become accustomed to absorbing .

Indeed, data from last month showed the world’s largest economy literally eating higher prices, with the Omicron wave having only a marginal impact on demand for food and drink. Elsewhere, strong auto sales and consumers’ penchant for online shopping in the time of COVID-19 gave the numbers powerful ballast.

“It’s definitely a big surprise,” Refinitiv director of consumer research Jharonne Martis told Yahoo Finance Live this week. “Online sales have been the big winner here, and that’s key because it shows us that the pandemic is still on the minds of consumers.”

Much like tweeting, US consumers are seemingly buying their way through soaring prices despite all the odds, including gas prices rising due to oil (pushed higher by geopolitical tensions). Shrunken investment sage Charlie Munger, who spoke to Yahoo Finance editor Andy Serwer on Wednesday, opined that inflation “is how democracies die.”

At least for now, consumers seem to be postponing doomsday by buying virtually everything they see, with almost reckless abandon. January retail data suggests there are still upside surprises to first-quarter growth in an economy that continues to defy gravity in multiple ways.

The spending numbers were enough for Wall Street veteran Chris Rupkey of FWDBONDS to half-jokely suggest that “depressed consumers are flooding[ed] malls” in January, even as sentiment indicators show citizens are glum over relentless inflation and other factors.

In fact, there’s another indicator that suggests consumers are embracing shopping and “self-care” as a way to escape the painful realities of our increasingly expensive times. With the boom in air travelAirbnb (ABNB) is something of a barometer of people’s willingness to travel, if their Q4 earnings are any indication.

“The simplest commentary is that travelers will travel,” KeyBanc Capital Markets equity research analyst Justin Patterson says of the effect of people returning to travel on Airbnb. “We have two years of really pent-up travel demand here.”

The “pent up” concept of consumers spending aggressively to make up for lost time during the pandemic is a powerful force multiplier. And it’s also reminiscent of something the Morning Brief has noted in the past: it’s not what consumers say, but what they do (much like polls the intentions of voters who overestimate or underestimate support for applicants) that ultimately matters.

Through Javier E.Davideditor at Yahoo finance. Follow him on @Teflongeek

What to watch today

Economy

  • 8:30 a.m. ET: Housing startsJanuary (1.695 million expected, 1.702 million in December)

  • 8:30 a.m. ET: Housing startsmonth over month, January (-0.4% expected, 1.4% in December)

  • 8:30 a.m. ET: Building permitJanuary (1.750 million expected, 1.873 million in December, revised up to 1.885 million)

  • 8:30 a.m. ET: Building permitmonth over month, January (-7.2% expected, 9.1% in December, revised upwards to 9.8%)

  • 8:30 a.m. ET: Initial jobless claimsweek ended February 12 (218,000 expected, 223,000 the previous week)

  • 8:30 a.m. ET: Continuing claimsweek ended February 5 (1.605 million in previous week)

  • 8:30 a.m. ET: Philadelphia Fed Trade Outlook IndexFebruary (20.0 expected, 23.2 in January)

Earnings

Pre-marketing

  • 7:00 a.m. ET: walmart (WMT) expected to report adjusted earnings of $1.51 per share on revenue of $151.68 billion

  • American foods (USFD) expected to report adjusted earnings of $0.40 per share on revenue of $7.64 billion

  • Palantir Technologies (PLTR) is expected to report adjusted earnings of $0.03 per share on revenue of $419.33 million

  • AutoNation (AN) expected to report adjusted earnings of $5.00 per share on revenue of $6.37 billion

Post-marketing

  • Shake Shack (SHAK) expected to report adjusted loss of $0.17 per share on revenue of $202.60 million

  • Roku (ROKU) expected to report adjusted earnings of $0.04 per share on revenue of $893.13 million

  • drop box (DBX) is expected to report adjusted earnings of $0.37 per share on revenue of $558.33 billion

Politics

  • President Biden heads to Ohio this afternoon to talk infrastructure. He will visit Cleveland and Lorain to discuss the money flowing to roads and bridges, water systems and environmental efforts.

  • At the Capitol, Sense. Bernie Sanders and Elizabeth Warren will appear during a hearing on “Wall Street Greed” at 11:00 a.m. ET. Sanders said he invited the CEOs of BlackRock, Blackstone and Apollo Global Management (the parent company of Yahoo Finance) to the hearing, but all declined to testify.

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UK to abolish golden visas for foreign investors [Yahoo Finance UK]

Yahoo Finance Highlights

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