Reinhart Week in Review by Madison Investments 9.17.2021


Retail Sales

Retail sales rose 0.7% in August. They had been expected to fall 0.7%. July retail sales growth was revised downward, from -1.1% to -1.8%.

Our Take: While August sales numbers were far better than expected, retail sales remain in a short-term downward trend established in May, but above their pre-pandemic longer-term trend. It is rather difficult to interpret month-to-month retail sales numbers, as the pandemic has upended seasonal adjustments to spending trends. In addition, retail sales are not adjusted for inflation, meaning, all else constant, higher prices result in higher sales. Taken at face value, the August report shows an economy that continues to expand.

Inflation

The Consumer Price Index rose 0.3% in August and has risen 5.3% year-over-year.

Our Take: Consumer price increases slowed somewhat from their recent pace indicating that perhaps inflation is starting to moderate. However, even if monthly inflation growth continues to slow, it will take quite some time to move from the current 5.3% annual inflation reading to the Fed’s 2.0% target.

Municipals

S&P Global Ratings raised California’s credit outlook from stable to positive. S&P cited long-term structural balance and high reserves as reasons for the outlook change. S&P’s outlook change occurred before the state issued more than $2 billion of general obligation bonds this week.

Our Take: California continues to rebound from the pandemic. The state collected higher-than-expected tax revenue, especially from high earners. The positive credit outlook and California’s improving fiscal health may lead to a decrease in borrowing costs for the state.

“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”), which also includes the Madison Scottsdale office. MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.

Any performance data shown represents past performance. Past performance is no guarantee of future results.

Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.

This website is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.

“Madison” and/or “Madison Investments” is the unifying tradename of Madison Investment Holdings, Inc., Madison Asset Management, LLC (“MAM”), and Madison Investment Advisors, LLC (“MIA”), which also includes the Madison Scottsdale office. MAM and MIA are registered as investment advisers with the U.S. Securities and Exchange Commission. Madison Funds are distributed by MFD Distributor, LLC. MFD Distributor, LLC is registered with the U.S. Securities and Exchange Commission as a broker-dealer and is a member firm of the Financial Industry Regulatory Authority. The home office for each firm listed above is 550 Science Drive, Madison, WI 53711. Madison’s toll-free number is 800-767-0300.
Any performance data shown represents past performance. Past performance is no guarantee of future results.
Non-deposit investment products are not federally insured, involve investment risk, may lose value and are not obligations of, or guaranteed by, any financial institution. Investment returns and principal value will fluctuate.
This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.
Although the information in this report has been obtained from sources that the firm believes to be reliable, we do not guarantee its accuracy, and any such information may be incomplete or condensed. All opinions included in this report constitute the firm’s judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.