1. The diabetes diet…
The Wegovy/Ozempic weight loss drug headlines have captured the markets attention for various reasons. After Australia’s retail sales came in well ahead of expectations, largely supported by a rise in spending on food and eating out, it seems like there could be a good market for the medication here. Consumers have also been taking advantage of larger than usual promotional activity and sales events in May. Retail trade saw the strongest monthly print since January 2023.
In the first chart below, you can see that eating out sales are 39% higher versus 2019, and eating at home is up 24% versus 2019 levels. Consumers are eating out more than at any point in the past 40 years.
Source: Barrenjoey
Source: Barrenjoey
2. The American dream…
We are keeping a close watch on the state of the US, for any read throughs for Australia. But there are mixed messages.
Weekly data for corporate bankruptcy filings has started to meaningfully deteriorate (aka rise) in recent weeks. The St. Louis Nowcast sees real GDP growth slowing and turning negative in Q2, the Atlanta Fed GDPNow has it positive and accelerating.
But insiders in the consumer staples sector (ticker XLP) have been buying. What do they know…
Source: Apollo, Credit Suisse (Data range: Jan 2006 – Jan 2023)
Source: Credit Suisse (Data range: April 2013 – April 2023)
Source: Credit Suisse (Data range: Jan 2011 – June 2023)
3. Looking ahead…
We’ve made it through 1H 2023. The Nasdaq is on the brink of its best opening six months ever. The resurgence has defied sceptics, coming in the face of bank failures, recession fears and the highest borrowing costs since 2007. As the market focused on the resilience in the economy and an improving outlook.
And looking at what’s in store next. Historically, a robust first-half in the stock market is a good omen for the rest of the year, according to Bloomberg. Since the early 1950s, when the index has climbed more than 10% through June, it rises by a median of 10% in the second half. July ranks as a top month for the S&P 500 as well over the past 10 years, with a 3.3% average gain, according to the Carson Group.
Source: Carson Investment Research, YCharts (1950 – 2022)