One Big Way Financial Media Lies to You

“Retail sales surged.”

That’s what most of the headlines said this week. 

But stocks certainly didn’t surge.

The US stock market (S&P 500) is down more than 8% for the year as we enter the back half of Q1. 

The retail sales number that the empty heads on TV are cheering this week was a 3.8% increase in January from December. A “faster-than-expected rebound,” trumpeted the New York Times. 

That is the seasonally adjusted month-over-month number.

What no major media outlet or the government trumpeted was the year-over-year number, which was 12.9%. 

Why wasn’t this number sung from the heavens? 

Because while it was the 11th straight month of double-digit year-over-year gains in retail sales, it was the smallest gain since February 2021. 

Does this chart of year-over-year US retail sales growth look like it’s surging to you?

If not, that’s because it’s not. Year-over-year growth — the real number that the market cares about — is slowing.

The same is happening with earnings growth and will happen with GDP. It’s down and to the right from the highs of last year. 

We are in a growth slowing environment. 

The Fed would typically cut rates in such an environment. 

Jerome thinks he knows better, and the Fed still says it’s going to raise rates. I think that news is as fake as surging retail sales. 

Gold is extra shiny this week as the US remains keen to keep Ukraine in the news as a convenient distraction from the one out of every ten dollars that just disappeared from most people’s retirement accounts. 

The yellow metal touched $1,900 per ounce this week for the first time since last June. When gold hit $1,900 back in July 2020, it went on to hit all-time highs north of $2,000 per ounce within two weeks. 

On the macro side of things I continue to position defensively. 

If you’re a reader of Foundational Profits, you know we’re long large gold miners, have put some money in non-US funds where markets haven’t been as volatile, and are looking for bond yields to reach their zenith. 

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