00:00What is the current data telling you about the direction of travel, knowing that not everything yet is priced in?
00:06Today, it was an interesting batch of data today.
00:09I would say it was mixed retail sales on the weaker side, particularly control group, which is the component within retail sales that maps directly to GDP.
00:18Speaking of mapping, what was also interesting is that the lower than expected PPI today, the embedded components, particular portfolio management fees,
00:28suggests maybe less upward pressure on PCE, because in the aftermath of the CPI data, what you could map from there to PCE suggests that we might see actually a little bit of a lift in PCE,
00:40kind of going against what the CPI data said.
00:43That alleviated a little bit with regard to PPI.
00:46But then you had Empire come out today, Philly Fed come out today.
00:51And it was interesting you saw a pickup on the new order side suggesting that some of that tariff-related, trade war-related front-running is still alive and well.
01:00And it's going to take a little while before we get any true clarity on this data.
01:06I think what Walmart may be expressing here is that with all the front-running that we saw already in terms of getting ahead of tariffs,
01:15that built inventories at a fairly low-cost basis.
01:17And I think the point we're in right now from a consumer-oriented company perspective is this gives them some leeway to experiment with what price increases are likely to be and what can stick.
01:31So I think the data is going to continue to be murky, at least for the next month or so.
01:36Are there any red flags on the consumer yet, Lizanne?
01:40I mean, we're always worried about the U.S. consumer.
01:42And at the end of the day, the U.S. consumer usually surprises us on the upside.
01:46Do you see data like credit card debt or a drawdown in checking accounts or anything like that that gives you pause?
01:56Some of the delinquency data is getting to a more troubling level.
02:01So I would keep an eye on that.
02:02But I think what really holds the key for the consumer is trends in the labor market.
02:07We learned that over the last several years, particularly back in, say, 2022, when we were in a bear market and stocks and recession odds were very, very elevated by virtue of the fact that we had a nine-handle on CPI, the most aggressive tightening cycle on the part of the Fed, in 40 years.
02:24But the prior period had allowed a lot of households to shore up their balance sheet.
02:29They still had a lot of excess savings.
02:32So you were able to ride through that, coupled with the fact that we were in that labor hoarding mindset on the part of companies.
02:39So we never got the labor market hit and allowed consumption to stay at healthy levels.
02:44That's really key now.
02:45It's not just key to ongoing ability for the consumer to hang in there, but also as it relates to Fed policy, because I think the Fed, in light of their dual mandate, may have a little bit more of an eye on the labor market side of their mandate than the inflation side of their mandate.
03:00So it's all wrapped up in this labor market bow.
03:03I think it's that data, particularly of the leading variety, that will be the tell.
03:08Claims today does not suggest we've got serious problems, but that's what I have my closest eye on.
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