July is a hot month for the aerospace industry.
A major shift in the narrative is underway... The overarching narrative of the markets and economy has been one of solid demand meeting lagging supply, a dynamic that has caused inflation to surge. While most signs suggest these trends continue to persist, a handful of anecdotes from the past week indicate this narrative could be changing. Depressed inventory/sales ratios have reflected supply chain disruptions. In fact, many businesses have been complaining that sales would be more robust if only they could keep their shelves stocked. In earnings calls last week, however, retail behemoth Walmart suggested this problem could be a thing of the past for them. "We like the fact that our inventory is up because so much of it is needed to be in stock on our side counters, but a 32% increase is higher than we want. We'll work through most or all of the excess inventory over the next couple of quarters." - Doug McMillon, CEO of Walmart. (Cont...) | |
There are two significant things to note about what's going on with retailers. First, they're being impacted by the fact that consumers are spending less money on tangible stuff and more money on intangible experiences. In fact, United Airlines confirmed as much on Monday when it revised up its outlook for summer travel. Second, this has little to do with any unexpected weakness in consumer spending. In fact, Walmart reported better-than-expected comparable store sales growth. Again, the headlines from last week are anecdotal, and the moves in the economic data are pretty small. Then again, most big trends start as anecdotes and small shifts in the data. As the story of the economy unfolds, we'll be keeping a close eye on layoffs, initial claims, inventories, supplier delivery times, order backlogs, and of course, all of the various ways inflation is reported. | |
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