Retail spending rising, despite inflation

(KRON) – On today’s Winners & Losers, financial expert Rob Black discusses the recent rise in stocks and retail spending, and Elon Musk hinting he might scrap his deal to buy Twitter.

Winner: Stocks rise as investors see bargains

Stocks were higher as the market tried to bounce from a punishing bear market for the tech-heavy NASDAQ and a sharp pullback for the S&P 500.

The S&P 500 is coming off a six-week losing streak — its longest since 2011. The Dow, meanwhile, has fallen for seven straight weeks, marking its longest weekly slide since 2001

Nearly 40% of investors who pulled money out of markets in the last year regret it.

California’s gas average tops $6 per gallon as prices across the U.S. surged $4.523. Prices are up 31 cents over the last month, and $1.89 higher than a year ago.

Walmart is down 6.3% after coming up shy of earnings estimates (sales were better than expected) and lowering its FY23 EPS outlook. Walmart contends that its customers seem “okay,” but that there are some changes in behavior due to inflation

Mortgage rates rose for the ninth time in 10 weeks. Thirty year fixed rates rose by three basis points to 5.30. Year-on-year, 30-year fixed rates were up by 236 basis points.

Winner: Retail spending increased 0.9% in April

Consumers kept spending in April, with retail sales rising in line with expectations despite an ongoing surge in prices.

The numbers are not adjusted for inflation, so they are indicative both of sustained spending as well as the fastest acceleration in prices the U.S. economy has seen in about 40 years.

Retail sales rose for the fourth consecutive month, despite inflation.

If pricing pressures can moderate enough to relieve some of the pressure on consumers, expect a rebound in economic growth in second quarter.

On a year-over-year basis, sales were up 8.2% on the headline number.

April’s gains were powered by a 4% gain from miscellaneous retail and a 2.1% jump in online sales. Bars and restaurants also showed a solid 2% increase. Gasoline sales soared 36.9% from a year ago.

Bar and restaurant sales rose 19.8% from a year ago, when the economy was still struggling with COVID-19 related restrictions.

The sales data are largely consistent with an economy that continues to grow despite inflation pressures.

The key takeaway from the report, which is not adjusted for inflation, is that higher pricing helped in the sales growth, yet spending increased across most discretionary categories.

Loser: Elon Musk hints he could scrap Twitter deal

No Twitter deal for Elon Musk would mean more love and attention for his prized asset Tesla — at least that’s how investors are reading it.

Shares of Tesla popped 4% in pre-market trading as Musk’s deal for Twitter was thrown into fresh doubt after he suggested that the social media site has more fake accounts than the less than 5% that it has disclosed in securities filings.

Musk said “Yesterday, Twitter’s CEO publicly refused to show proof of <5%,” adding that “this deal cannot move forward until he does.”

Tesla’s stock dropped 34% since Musk revealed a 9.2% stake in Twitter in early April.

Musk has behaved in typically erratic fashion. He first disclosed himself as a passive investor before pivoting to become an active one; he initially agreed to be on the board but changed his mind on that front, too.

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Since reaching a deal to buy Twitter for $44 billion on April 25, the CEO has repeatedly shown signs he’s having second thoughts.

Musk responded with a poop emoji to Twitter’s CEO. 

The saga is weighing heavily on employee morale at Twitter.