The Retail Sales Mirage: When 0.6% Moves Mountains

The algos are drunk again.

Yesterday's U.S. retail sales print of +0.6% month-over-month sent the S&P 500 careening to yet another all-time high at 6,296.79, because apparently we've reached peak civilization when beating expectations by half a percentage point constitutes economic triumph. The consensus was 0.1%. We got six times that. Cue the champagne.

But let's dissect this theatrical performance, shall we? After May's brutal -0.9% drop—which everyone conveniently forgot about until Thursday's revision reminded us—June's bounce looks less like economic resilience and more like a dead cat learning to levitate. The year-over-year retail sales growth? Still anemic at 2.3%, barely outpacing inflation's cruel march.

Yet here we are, watching Netflix trade like it just discovered the cure for entropy after reporting quarterly earnings that "topped estimates." The streaming giant warned of lower operating margins for the back half of 2025, but the market heard "beat consensus" and promptly lost its collective mind. NFLX closed up 8% in after-hours trading because, in this environment, any company that doesn't actively combust is apparently undervalued.

The truly rich part? The Magnificent Seven earnings parade kicks off next week with Alphabet and Tesla taking the stage. Tesla's been carrying $1.1 billion in Bitcoin on its books—11,509 coins that Musk refuses to touch, making the EV maker as much a crypto play as an automotive one. When your car company's digital asset holdings fluctuate more than your quarterly vehicle deliveries, maybe it's time to update the mission statement.

Meanwhile, the Nasdaq managed a heroic 0.05% gain to 20,895.66, which in today's market qualifies as sideways action. The Dow, ever the contrarian grandfather, shed 142 points because apparently someone remembered that fundamentals exist.

Here's what really happened: institutional money needed somewhere to hide after weeks of positioning for the Fed's next move, retail sales gave them cover to chase momentum, and the algos did the rest. The humans went along for the ride because, frankly, what else are they going to do?

The S&P 500 earnings growth for this quarter is tracking toward 5%—not the 11% estimated at the start of the year, but who's counting? Full-year growth is expected to hit high-single-digits, with analysts dreaming of double-digit acceleration in 2026. The same analysts who missed this quarter by six percentage points, but optimism is free.

GDP growth projections for 2025 sit at a tepid 1.4%, down from 2024's 2.8%. Consumer spending drives two-thirds of economic activity, so when retail sales surprise to the upside, the narrative writes itself: American resilience, unstoppable consumer, all-time highs justified.

The reality is messier. Credit card delinquencies are climbing. Savings rates remain depressed. Real wages, after adjusting for shelter costs, tell a different story than headline inflation figures. But the market doesn't price in nuance—it prices in momentum and liquidity flows.

So here we sit, 157 points from 44,500 on the Dow, watching Netflix get rewarded for managing expectations and Tesla prepare to report earnings where Bitcoin accounting changes might matter more than actual car sales. The Fed's balance sheet remains bloated, money velocity stays subdued, and yet somehow retail sales growth of 0.6% in a single month justifies valuations that would make the dot-com era blush.

The casino is open. The house always wins. And retail sales data, apparently, is the new house edge.

Pass the chips.