As previewed , July retail sales accelerated from June’s slower pace due to: first, a strong and early start to back-to-school, second, less disruptive weather, and third, a lessening of consumer uncertainty about inflation, as shown in the chart below. (The New York Fed’s survey also showed that expectations for the rate of inflation 1-year out also dropped for those with a household income above $100K). We suspect that the first was the largest factor, and as such, underlying retail sales should slow (ex.

McDonald’s reported a much-improved US comp-sales increase of 2.5%, a 510bps QoQ improvement. Advan data estimates that traffic improved 200bps QoQ and that ticket improved 300 bps to a +2.1% increase. The 2.1% increase is less than inflation (CPI) at 3.5% indicating that McDonald’s is underpricing the market in order to amplify its value positioning; we know that they are aggressively messaging “McValue” deals. CEO Chris Kempczinski said, “Overall, we’ve made good progress with our value offerings.