Retail Sales - Easy Peasy Analysis

The market is looking for a 0.7% MoM print for today's Retail Sales number, vs. 0.1% prior. Why is Retail Sales (more) important than usual? Because the FOMC's monetary policy is now data-dependant. So good data will get the market uber-bullish and push for a september rate hike. This will of course drive the USD higher. Vice versa: a miss will tamper with the bullishness and keep market expectations suppressed.

So analysts today are talking about a few things:

- higher auto sales

- higher wage growth

- higher hourly earnings

But what do the facts tell us?

Avg Hourly earnings are higher than previous - positive

ICSC chainstore sales - lower than the peak, but trend is positive

Employment component of most recent ISM - positive

Redbook - looks bad.

So overall, there is room for improvement relative to the last data print. But an increase from 0.1% to 0.7% ? That seems a little too much. Logic would tell us to be more conservative and even if I cannot put a precise estimate on this, I think it'll be 0.5%.  I expect a higher number than 0.1%, but lower than expectations.

Good Luck!