May Interim Financial Data Trends: Where the Economy Stands

 | May 31, 2023 15:37

  • Global economic surprises suggest that GDP growth could be better than feared

  • Investors can gain insight into the state of the domestic and international economy from retailers, automakers, and financial trading hub companies this week

  • Forming a mosaic on the state of markets at the macro and micro levels is critical to managing risk as volatility ticks back up

    • It’s the ever-looming recession . Traders have been waiting for signs that the domestic economy is cooling, but while one indicator here or there reveals weakness, economic surprises have generally been on the positive side lately. Last week, the global read on broad global manufacturing, services, and consumer activity showed some of the best figures (relative to expectations) in months. As the ‘economic surprise index’ baffles prognosticators, the Federal Reserve is watching with a hawkish eye. Meanwhile, corporate uncertainty just hit a 3-quarter high according to Wall Street Horizon’s proprietary data.

    A Key Stretch of Macro News/h2

    Last week’s Fed minutes didn’t unveil any major revelations. Inflation pressures are easing, but the core CPI and PCE are much too hot while the labor market remains too tight for comfort. Amid more Fed Speak over the coming days, surely attempting to jawbone investors, a slew of major economic data hits the tape. By Friday afternoon, we will know a whole lot more about the state of the economy and upcoming Fed policy.

    Pay Attention to Economy-Wide Reports, but Don’t Ignore Industry Trends/h2

    And while data points like the ISM Manufacturing report, JOLTS, ADP employment, jobless claims, and the May payrolls report capture headlines, traders must also keep a watchful eye on events at the firm-specific level. The turn of the month features key interim business updates that span industries and sectors. This week, we get a retail read from Costco (NASDAQ:COST) and The Buckle (NYSE:BKE) along with trading volume totals from Cboe Global Markets (NYSE:CBOE) and CME Group (NASDAQ:CME), among others. Also, the automakers will provide their May sales figures.

    May Retail Roundup/h2

    Kicking things off with the consumer, the April retail sales report included some internal data that were better than feared as excess savings dwindles and consumer credit rises. Skeptics wonder how long that trend can sustain itself. Following a mixed Q1 reported by Costco last Thursday night, with signs that the higher-end consumer is now starting to feel some pain, its May report on comparable-store sales due out Thursday afternoon may drive volatility among retail stocks.

    Retail ETF (XRT) Struggles as Costco Shares Consolidate