With an economy — and market valuations for that matter — built on the back of the consumer, the Monthly Retail Sales report provides critical insight into how we are doing when it comes to the health of the economy.

You’ll often hear the talking heads on the business and news channels — myself included at times — refer to how the last few years have been a “recover-less recovery” —stagnant wages, lack of new jobs, snail-paced GDP growth, etc.

One of the key factors behind what has become almost the “new normal” is the lack of corporate investment in both capital expenditures and R&D — even in a day of close to zero, or in some parts of the world even negative interest rates. And yet, the markets have reached historical levels, achieved through cost-cutting measures, share buy-back programs, productivity enhancements and other tricks of the trade CFO’s and Board Rooms have used to their advantage.

And so, when it comes to our anemic GDP growth, it’s been the consumer that has had to handle most of the heavy lifting. Last Friday, we received the September Retail Sales Report and when we dig into the details, we find several confirming data points for our thematic approach.

Download this week’s issue at the bottom of this email or click here.

Chris Versace
Chief Investment Officer
Tematica Research

• It’s not even Halloween, yet the Markets got spooked last week.
  Market turbulence continued last week as in addition to several negative earnings pre-announcements, we received several data points which led the S&P 500 to fall nearly 1 percent —the third consecutive weekly decline in the index. . .  Read More >>
• Politics looming large on both sides of the pond
  Apparently, there is a presidential election taking place in the United States — who knew? But on the other side of the pond, the realities of the Brexit vote are coming home to roost, and it has its cross-hairs right on one of the staples of the British diet . . .  Read More >>
• Our first real look at how the S&P 500 will measure up to earnings expectations
  We’ve been on record saying the 6 percent quarter over quarter increase in December earnings expectations has been overly robust given a variety of factors, including the fact that earnings for the S&P 500 have recorded six consecutive quarters of year-over-year declines since 2008. This week almost 20% of the S&P 500 companies report and we dig into what we’re going to be looking for . . .  Read More >>

Click below to download the full report:

Monday Morning Kickoff 10-17-2016