Three Data Points on AI Demand, Consumer Deposits, Retail Inventory, Worth Sharing This Week Ending 5.12.23
Data + Data = Data
Consumer Deposits +40% to + 70% above 2019 in April = good for the foundation of the economy.
AI Interest Continues, But Shifting. See what we mean.
Inventory and Sales Realigning = good for retail companies.
CONSUMER SAVINGS +40% TO +70% HIGHER THAN 2019 LEVELS AS OF APRIL 2023
Conversations continue to seesaw between inflation and recession fears. These are two very large pressures on market sentiment.
Recent data indicates that inflation has been decreasing consistently, with the year-over-year growth rate of the Consumer Price Index (CPI) showing a decline for the 10th to 12th consecutive month. We expect headline CPI to push below 4% by June.
Despite persistent worries about a possible recession, it is worth noting that consumer bank deposits are currently at levels significantly higher than those seen in 2019. Additionally, there is a strong cushion of near-record home equity, which as we have referenced for half a year now, further contributes to the resilience of the economy and helps alleviate concerns regarding a large (hard) downturn.
AI SEARCH AND INTEREST SOARING
As we observe the trends in search and web interests, it is evident that the hype surrounding Artificial Intelligence (AI) remains strong and continues to grow.
However, that interest continues to shift. Interest in platforms like ChatGPT, or MidJourney have come off their highs (not shown in the chart above). We bring this up as new breakthrough moments feel great and inspiring, however remaining disciplined to the hype is important for risk management.
We want to figure out who will be the last one standing, not the first one out of the gate.
INVENTORY LEVELS MOVING BACK TOWARD FLAT, WHICH IS GOOD FOR FUTURE MARGINS.
According to a monthly survey conducted by Flexport, one of the larger software platforms for global trade. They noted that there has been a notable increase in the percentage of respondents who stated, "I have what I need." In the survey, this figure has risen to 48% from its previous level of 33% in March. This suggests that inventory levels for those involved in buying and selling physical goods are becoming more balanced.
In line with this, Tapestry, the company that owns popular brands like Coach, Kate Spade, and Stuart Weitzman, recently reported its earnings. The company indicated that its sales and inventory are now aligned, which is a positive development for retail as a whole. This synchronization allows Tapestry to focus on managing margins effectively.
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Disclaimer: Not a recommendation to purchase or sell any securities mentioned. This is for educational purposes only.