The market still feels that more data is needed to prove that the US consumer's ability has improved! And thus prove the health of the US economy!
Although this week's economic data showed that CPI fell beyond expectations, along with a simultaneous decline in PPI,
All this shows that the pressure of US inflation is being eased by the supply side. However, supply-side pressure relief does not represent everything. The demand side, that is, consumers' willingness to consume, is also a key point.
Thursday's retail data, which far exceeded market expectations, did give a boost to the risk markets. However, the biggest driving force behind the increase came from the strong rebound in auto sales. Although retail data in other areas were also good, they were far from optimistic.
Walmart, an important barometer of U.S. consumption, has raised its earnings forecast for this year, but a detailed look at the data reveals that this is not a universal situation.
First of all, in the consumption data, the data from Walmart shows that people are still spending more on daily necessities rather than in other areas. So although Walmart’s sales are optimistic, it does not directly represent an increase in people’s consumption capacity, especially as Walmart’s full operation in the areas of discounts and e-commerce has led to its good performance.
McDonald's, which is also in the retail industry, performed less than satisfactory. In order to attract customers to consume, McDonald's even offered a $5 meal combo, but the result was still less than satisfactory. Other retail companies have lowered or are preparing to lower their earnings expectations for the second half of the year. At the same time, some professionals believe that it is normal for the retail industry to lower its expectations. For example, Walmart's upward adjustment of expectations is not a common phenomenon in the industry.
Therefore, looking at the current US economy, the pressure on the supply side has eased, but if the demand side cannot be stimulated, it will still face major economic problems. This is also one of the important factors that many parties believe should be used to cut interest rates. Although the consumer confidence index provided by the University of Michigan rose on Friday, whether consumers can be improved in the next few months of this year is still a concern for people in the US retail and investment fields.
The interest rate cut is not only what our risk market expects, but also what more needs. However, I think that for the United States, they nominally consider the wishes of the middle and lower classes, but the core is still to refer to the interests of the middle and upper classes, so we cannot relax on the issue of interest rate cuts until the moment of implementation.
