This Weekly Market Update reviews the top market headlines; Retail Sales Weaken, Inflation Ticks Up in December, Commodity Prices Jump
  • Retail sales declined 0.7% in December from the prior month, their third straight monthly decline
  • U.S. CPI rose 0.4% in December, led by an 8.4% increase in gasoline prices
  • The prices of corn, wheat, and soybeans last week all hit highs not seen in over five years

Top Three Market Headlines 

Retail Sales Weaken: Reflecting the impact of certain states tightening restrictions on business activity in attempts to suppress Covid-19 cases, the U.S. Department of Commerce reported last week that spending at online retailers, restaurants, and brick-and-mortar stores decreased 0.7% in December from the prior month. This marked the third consecutive month sales declined on a month-over-month basis. Total sales excluding autos and fuel decreased 2.1%, the largest monthly decline since April. Sales of food and drink services fell by 4.5% as increasing restrictions on restaurants and bars took effect. In addition, online sales in December were unusually weak, as non-store sales declined 5.8%.

Inflation Ticks Up in December: The U.S. consumer price index (CPI) rose 0.4% in December from the prior month and 1.4% over the prior year, each being a slight uptick from the pace recorded in November. A majority of December’s increase was fueled by an 8.4% jump in gasoline prices. Excluding the volatile food and energy categories, the “core” CPI rose 0.1% and 1.6% versus the prior month and year, respectfully, little changed from November’s pace. For all of 2020 the CPI rose 1.4%, which is the smallest yearly gain for the index since 2015.

Commodity Prices Jump: While inflation measures through December remained subdued, as noted above, commodity prices have been on the rise lately, particularly in the agricultural sector. For instance, corn last week hit its highest price since July of 2013 and has risen nearly 10% already this year, while wheat and soybeans reached prices not seen since 2014 and are up 5% and 8%, respectfully, year-to-date. The recent price increases have come in the wake of a report issued by the USDA that 2020 harvests were much lower than expected. If the recent gains hold, headline inflation numbers may be impacted in upcoming months.

 

As of January 19, 2021 Week Quarter-To-Date Year-To-Date One-Year
MSCI All Country World -1.16% 1.52% 1.52% 16.23%
S&P 500 -1.46% 0.39% 0.39% 16.66%
Russell 2000 1.51% 7.53% 7.53% 27.89%
MSCI EAFE -1.36% 1.76% 1.76% 9.19%
MSCI Emerging Markets 0.33% 5.18% 5.18% 21.86%
FTSE NAREIT 2.43% -0.17% -0.17% -9.03%
Bloomberg Commodity 1.00% 3.08% 3.08% 0.87%
Barclays U.S. Aggregate 0.19% -0.76% -0.76% 6.00%

CNBC 01/13/21, WSJ 1/13/2021, U.S. Department of Commerce 1/15/2021 Morningstar Direct. Returns for periods greater than one year are annualized. Investment advisory, named and independent fiduciary services are offered through Gallagher Fiduciary Advisors, LLC, an SEC Registered Investment Adviser. Gallagher Fiduciary Advisors, LLC does not express an investment opinion regarding any specific commodity, sector or individual security. Unless otherwise expressly noted, the contents of this communication do not constitute securities or investment advice, nor should this communication be construed as an opinion regarding the appropriateness of any investment. Gallagher Fiduciary Advisors, LLC is a single-member, limited-liability company, with Gallagher Benefit Services, Inc. as its single member. Neither Arthur J. Gallagher & Co., Gallagher Fiduciary Advisors, LLC nor their affiliates provide accounting, legal or tax advice. The information provided cannot take into account all the various factors that may affect your particular situation, therefore you should consult your Gallagher Fiduciary Advisors consultant before acting upon any information or recommendation contained herein to discuss the suitability of the information/recommendation for your specific situation.