Streamline Business Closing Sales for Retail Trade

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this video is about the retail sales report hello I'm Peter Martin with trading two-on-two now I thought I'd explain a little about US retail sales which is one of the more closely followed economic reports released each month it's put together and released by the Census Bureau which is part of the US Commerce Department and the full name of the report is the advanced monthly sales for retail trade and food services report but in the market it is generally just referred to as retail sales the report comes out at 8:30 a.m. u.s. Eastern Time which normally equates to 1:30 p.m. UK time and it comes out about a couple of weeks after the period on which it's reporting so I'm recording this video right at the end of October and October's data is due to come out in on the 15th of November so we can see that's quite close in proximity to the period on which it's reporting now as I said retail sales is one of those reports that's one of those ones that people very closely follow each month why is that well if we consider what's going on in the financial markets at the moment the US stock market has been coming under quite a lot of pressure we've seen share prices declining this month and one of the questions that naturally arises out of that situation is whether it is a temporary fluctuation and investor conference that we're seeing or is this perhaps precising something more permanent or more lasting that's happening with the fundamentals with the actual economy so we have to look at some actual measurements of what can we look at well we could look at the broadest and most comprehensive measure of overall economic health which is the GDP report the only problem with that is that the GDP report is not very timely as I said I'm recording this at the end of October we only just recently got the advanced or first estimate of third quarter GDP the third quarter being July August and September and so if we think about what is contained in that report you have to wait to learn what's going on in July in August you have to wait all the way through to deep into or Kobus and not the most timely report so what other reports can we look at that are more timely instead of looking at GDP well once our economists use is to look at non-farm payrolls and use it as a proxy for GDP because historically there has been a very tight correlation between non-farm payrolls and GDP now one other trick though is to look at monthly reports containing card data that is actually a to the GDP report and one of the crucial key areas here is personal consumer expenditures basically consumer spending because personal Consumer Expenditure growth is one of the major drivers in GDP growth now where we can see the hard data for this is in a monthly report called the personal income and outlays report however there is a more timely version that we can look at namely the retail sales report which comes out up to two weeks ahead of the personal income and outlays report and contains data that can allow us to get insights into what's going on with consumer spending so how does the market react to retail sales well all things being equal higher retail sales we would normally expect to contribute to higher corporate profits and so that tends to be favorable for stock prices if we tell sales are surging higher that can contribute to higher retail prices so there's an inflationary aspect to the report of strong retail sales and so strong retail sales tends to be unfavorable for bond prices which don't like higher inflation and we can also look at the way the report breaks down the different types of sales to give us some insights into different sexes or even for individual shares for examples let's say that I hold shares in Home Depot then I might be very interested in looking in the retail sales report at the building materials and gardening supply section of the report or and similarly I hold shares in Gap than I might be very interested in looking at the breakdown for clothing and clothing accessory stores and the report also breaks down retail sales into certain overall subgroups and one of these excludes motor vehicle sales and this is of interest because motor vehicle sales can vary a lot more widely than other areas in the report so looking at this area effectively helps to strip out volatility which makes it easier to spot larger trends now the data in the retail sales report is seasonally adjusted so it does take into account seasonal variations that said an area of focus our sales over the holiday shopping season which is the span of time between Thanksgiving and Christmas what's interesting about that of course is that Thanksgiving doesn't occur on a fixed date which means that the span of days actually varies in time each year Thanksgiving falls on the fourth Thursday in November that's the 22nd of November this year and I make it that there's 32 days between then and Christmas which is on the very long end of that variable range of days that you can have for that shopping period and conventional wisdom is that the longer the period the better it is for holiday season sales and historically there has been a real you can see that there is a relationship between holiday season sales and how the overall economy fares so that is a brief explanation of retail sales I hope you enjoyed the video if you did please hit the thumbs up button and give us a like or if you've got any feedback why not send us a message in the comment section we do read through every comment that we receive now as well as doing these educational videos about trading in general we also do videos with analysis of popular markets including gold and crude oil and euro versus US dollar the best way to access all those videos is to click on the subscribe button and subscribe to our youtube channel and we do upload new videos on a regular the basis if you hit the alarm bell icon then you'll get a notification the next time we upload a new video but that's all for this time from me Peter Martin and trading two-one-two thanks for watching and I'll see you next time goodbye