Poll: How Will Weak Holiday Retail Sales Affect the Fed’s Strategy?
US retail sales for Thanksgiving and Black Friday are the weakest since 2009. In this week’s CFA Institute Financial NewsBrief, we asked readers how this might affect the Fed’s decision of when to unwind quantitative easing.
The “taper/no taper” discussion in summer 2013 showed us that markets the world over have an acute interest in US monetary policy. Capital flows, yield curves and currencies around the world all moved sharply in response to changes in language from the US Federal Reserve. In August 2013, the Fed delayed the taper indefinitely owing to a somewhat sluggish US economy.
In the United States this past Thanksgiving weekend, overall retail sales (both in store and online) were down 2.9% versus last year (even though retailers initiated holiday discounts earlier in November than in previous years and Internet sales on “Cyber Monday” were up sharply at +16.5%). Although these results are not definitive, we wanted to gauge investors’ perceptions of US economic growth and, ultimately, their views on changes in US monetary policy. Of the 714 respondents, approximately 51% believe that the Fed will maintain or increase QE, whereas the remaining 49% believe the Fed will reduce QE and/or ignore current trends in US holiday sales. Clearly, the market is sharply divided as to what the Fed might do next.
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