Tonight's US “horror data” will explode!

At 20:30 on Thursday, the US will announce the key monthly retail sales rate for September, commonly known as “horror data.”

According to Bank of America's latest real-time spending data, the retail sales data released tonight will still leave traders and strategists stunned. They thought that American consumers with excessive leverage and under-savings would eventually cut back on spending, but the US Census Bureau did not let “horror data” fall off the cliff, but instead tried month after month to come up with numbers higher than expected.

Financial blogger Zero Hedge said that according to Bank of America's credit and debit card aggregation data, total bank card spending in September fell 0.9% year over year. But the only trick left for Biden's goal seekers is to use bizarre seasonal adjustments to make the weak data look unexpectedly strong, and then quietly lower it over the next few months, when no one cares. This is exactly what is going to happen on Thursday.

Bank of America economist Aditya Bhave (Aditya Bhave) said that the Census Bureau will use extreme seasonal adjustments to explain and offset various calendar effects.

Using the same seasonal adjustments as the Census Bureau, Bank of America calculated that each household's credit card spending surged 0.6% month-on-month in September, but this was only based on seasonal adjustments — as described above, it actually declined by 0.9%.

Continuing to calculate this seasonal adjustment, Bank of America expects retail sales of cars in September and retail sales after deducting the Core Control Group (retail sales after deducting cars, gasoline, construction materials, and restaurants), respectively, as announced by the Census Bureau, to increase by 0.7% and 0.8%, respectively, both higher than market expectations.

Therefore, since the entire September retail sales report will be a fictional function of some Excel spreadsheets superimposed to make the last month before the election beautiful, and retail sales greatly exceed expectations, Bank of America expects retail sales in almost all categories to increase dramatically. Among them, the biggest winners are department stores, daily necessities department stores, and clothing stores.

In summary, the Bank of America warned that if its forecast is correct, actual (that is, inflation-adjusted) core control retail sales will increase by nearly 7% on a three-month annualized basis. In other words, tonight's “horror data” will drive US bond yields and the US dollar to soar, and any possibility of further interest rate cuts will collapse!

And that's not all: before Hurricane Helena hit, grocery spending surged in affected states such as Florida, Georgia, North Carolina, and South Carolina, which is likely due to stockpiling, which will further boost retail sales. Although total bank card spending in these states slowed before and after the hurricane, growth in total card spending and grocery spending in the affected states has been normal since then.

Bank of America realized that in the last report before the election, the game was manipulated, so it cannot help but greatly appreciate the seasonal adjustments aimed at greasing and dusting tonight's -0.9% actual data. That's why Bawe wrote, “We anticipate this report will be very important because it comes against the backdrop of very encouraging GDP and GDI revisions and the September employment report.”

A month ago, the market's question was whether the US is going into recession or a soft landing. If retail sales accelerate significantly, this statement may further shift to “no landing,” or even accelerate again.

Zero Hedge lamented, “Great, the GDP blowout, the employment report blew up, and now it's another excellent retail sales. All of this means that a sharp cut in interest rates by the Federal Reserve was a terrible mistake. If so, Powell would need to raise interest rates, right? But apparently, it was wrong again. If anyone asks: Can retail sales data shorten the interest rate cut cycle? Their answer would be: Maybe not. Not right now, at least in our opinion. Since the policy interest rate is still close to 5%, we believe that as long as anti-inflation continues, even with strong labor and economic activity data, the Federal Reserve will safely cut interest rates a few more times (two to four times). ”