19 Feb February 19, 2021
Week in Review
Retail Sales
Retail sales rose 5.3% in January after three consecutive months of declines.
Our Take: The glass-half-full explanation for the surge in sales is that the consumer finally reappeared as the economic landscape improved. The glass-half-empty crowd will point to ineffective seasonal adjustments and December stimulus checks. January is typically adjusted higher to account for the large amount of holiday spending relative to January. The pandemic has completely upended normal spending patterns. Meanwhile, six-hundred-dollar stimulus checks put money in consumer’s pockets, some of which was clearly spent. Either way, a 5.3% increase was welcome news. The question now is whether this was the start of a trend or an aberration.
Energy
Unusually cold weather in Texas caused shut-ins of oil and gas wells and widespread problems with the ERCOT electrical grid. These cold-weather issues resulted in localized price dislocations in natural gas and power markets and also caused upward pressure on crude prices and gasoline crack spreads.
Our Take: Texas crude and natural gas production is likely to return to previous levels fairly quickly, and so some retracing of recent price moves should be expected. Shut-in refining capacity will take longer to come back online, and so gasoline prices will probably be slower to return to pre-freeze levels. The vulnerabilities in the ERCOT grid will require some investment to address, and this will place upward pressure on end-user power prices in the area as rates charged by utilities will need to cover the cost of these investments.
Municipals
The Census Bureau announced that census data used in redistricting may not be released until September 30. The redistricting data is typically released on April 1st, which gives officials time to redraw maps and address any legal challenges in time for fall primary elections.
Our Take: The pandemic delayed the completion of 2020 Census last fall. Now, the delay in the release of the data could have a lingering effect on upcoming elections. Some states may choose to delay the redistricting process while others are bound by deadlines in the state constitution.
All expressions of opinions are subject to change without notice in reaction to shifting market conditions. All information is based on sources deemed reliable, but no warranty or guarantee is made as to its accuracy or completeness. Neither the information nor any opinion expressed herein constitutes a solicitation for the purchase or sale of any securities and should not be relied on as financial advice.