OPENING
Below we share five stunning charts that drive our views on inflation, the consumer, and several specific industries/companies. We also added a bonus chart. We think the main takeaway is clear. The foundational costs of the economy are coming down dramatically (freight /gas), and these declines will positively flow through the economy. These trends WILL allow the FED to sleep better at night, therefore less pressure on markets. We have an interesting feeling that participants may be talking about 'deflation fears" next year"...
1. Origin of Inflation Now Collapsing Lower (Positive)
The rise in freight costs ignited the move higher in inflation, and now we are seeing these prices decrease sharply. We receive the Freightos freight rate update every Wednesday. Rates from China to the US fell -20% in a single week, bringing rates down 79% year over year. Remember we got the Freightos team on our Podcast Inside Scoop to talk freight.
2. Gas Prices Have Declined 85 Days in a Row. The Second Longest Streak within the Dataset.
Gas prices rose sharply during the first half of 2022 but have now seen a large decline for 85 straight days. We looked at how that correlated to month-over-month drops in inflation data. In two of the last three streaks of this magnitude, we witnessed three straight months of negative month-over-month declines in inflation readings. July's month-over-month reading was negative when you scroll out several decimals. We expect around 0% inflation in August, with more to come after that.
3. What About Demand, the Consumer, Etc... Data Says Consumers are Eating Out (OpenTable Data)
The data below looks at the number of seated diners using OpenTable. We started using this dataset during the heart of Covid, which has since been an integral part of our consumer awareness data analysis. The data is normalized and shows the overall trend. When this data is above 0, diners are eating out at a faster clip than the start date. Today this series made a new high, suggesting consumer spending on services continues.
4. WhatsApp for Business Seeing Record Downloads in the US. Signal that SMBs Adapting...
Humans adapt during periods of financial uncertainty, which has happened for ages. It is why economic growth cycles are around 5x longer than the length of economic contraction periods. WhatsApp Business Downloads are not only a positive sign for Meta but highlight how small businesses are likely to create new business opportunities around messaging.
WhatsApp for business saw record downloads in the US in August, underscoring the demand for business applications. We think the creator economy is a megatrend that allows the individual to create business through purpose-built tools.
5. App Downloads in August Show Winners Winning.
Let's turn to global downloads. We monitor this monthly, and here are some basic thoughts about August downloads.
1. TikTok remains strong but slowing from peak adds.
2. Instagram saw its 2nd best month ever.
4. WhatsApp realized its 4th best month ever in the US
5. WhatsApp for Business had its BEST month ever in the US
6. Watch out for Toast. Restaurants are going digital and Toast had record downloads.
7. Duolingo continues to impress with its best download month ever.
8. In the US BeReal had the best month. Will it continue? We will be monitoring.
9. Fiverr saw 880k downloads, 2x the amount of any month pre-covid.
10. Shopify Commerce app record downloads.
BONUS
Average bull market length to bear market length shows bulls have history on their side.
Most equity contractions are around 1 year in length, with expansions lasting 5-6 years on average. History doesn't repeat, but it rhymes.
* This post is for educational purposes only. Please see the disclaimer page.