The Fed conveniently excludes Food and Energy price increases from its Core CPI calculation. Speaking personally, our grocery bill is up approximately one-third vs. last year. We wouldn’t be surprised if many Americans were experiencing grocery price increases of 25-50% over last year. At some point Food (and Energy), price increases translate into consumers buying fewer discretionary goods and services. Thus, today’s retail report which saw retail sales decline 1.1% June to July. What will be the outcome?
Well, for one we wrote a book preaching that Stagflation Is Imminent. Our outlook has not changed to that end. In addition, we expect retail operations whether they be clothing stores, banks, fast food operations, coffee shops and more to deploy advanced automation technologies underpinned by artificial intelligence, machine learning, NLP, voice recognition and more of the unsexy technologies that operate in the background to juice productivity. Amazon (tkr: AMZN), Google (tkr: GOOG), and Microsoft (tkr: MSFT), are the big three within the “AI” space with Google as the King. Look to firms such as Cogito, DataRobot and SS&C Technologies (tkr: SSNC), for examples of vertical-specific applications of AI.