The awful conflict in the Ukraine drags on, inflation remains at historically high levels, the Fed reiterates its intention to bring inflation under control (even if it means weakening the economy), bellwether retailer Target sees its share price have its worst day since Black Monday in 1987, and the S&P 500 and Dow Jones Industrial Average have their worst down days since June of 2020, as the former flirts with a Bear Market (defined as a pullback peak to trough of 20%).

We revisit the issues that weighed on risk assets last week – and have fed into increasing talk of a looming recession – not because we want to kick off this week in a particularly pessimistic mood but because, as investors, we know we must deal with events and developments as they are, not as we want them to be. And last week – along with most of 2022 – was a very challenging stretch for US equities.

That written, as we have cataloged what has weighed on markets of late, we think it is appropriate to spend a minute looking at one thing that continues to go right for the US economy (and which we are hopeful will prove to be a catalyst for a more constructive mood on Wall Street) and that is the consumer, as last week we learned April Retail Sales were up a robust 0.9% month to month (and it is also worth noting that March retail sales were revised sharply higher, from an initial reading of up 0.5% to an updated reading of up 1.4%; see chart). As we have noted before, the US consumer, aided by a tight labor market, an elevated housing market, and rising wages, remains in solid financial condition. Even the extremely disappointing results out of Target – and other retailers last week – seem to have had less to do with end consumer demand and more to do with the mix of goods sold and cost inflation (headwinds for retailers to be sure, but nothing that rises to the level of importance as does the health of the US consumer). It has become difficult to maintain an optimistic view of things of late; but if the consumer is hanging in there, we think we should too.


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The views expressed are those of Brinker Capital and are not intended as investment advice or recommendation. For informational purposes only. Brinker Capital Investments, LLC, a registered investment advisor. 0899-BCI-5/23/2022