TRADE vs. TREND: In contrast to the general deceleration observed in March, on balance, the April Macro data to date is registering sequential improvement and agreeing with the TREND in the domestic economic data which has been one of discrete acceleration since November.
As we have highlighted, with the consumer related data (housing, labor, confidence, consumption, commodity deflation) remaining strong, we have been inclined to stick with the TREND view as it relates to asset class positioning and targeted exposure in domestic, consumer facing equities. We show the M/M (TRADE) as well as the Q/Q and Y/Y (TREND) changes in the table below.
April: The bulk of the reported consumer, housing, confidence and inflation data continued to come-in positive in April. And while the ISM New Orders, Backlog and Current Production components all improved sequentially with the latest reading, the regional manufacturing data slowed further in aggregate. On the balance sheet side of the consumer, given the strong purchase application and pending home sales figures, we expect the April Housing data to remain strong.
Retail Sales: This morning's data showed U.S. Retail Sales growth accelerating sequentially across the various index aggregates. Total Retail and Food Service Sales accelerated to +0.1% m/m in April vs a revised -0.5% in March. On a year-over-year basis, growth in Total Retail Sales and Retail Sales less Food and Auto accelerated 70 bps and 60 bps sequentially, respectively.
On the tax refund front, the latest treasury data (5/9/13) shows individual income tax refunds are currently lagging last years total by ~$8.8B. In addition to higher refund totals stemming from higher nominal tax receipts in FY12, we expect the remaining delta due to tax refund processing delays to resolve positively over the balance of the month.
Christian B. Drake