Retail gaming could still be alive despite inflation

IIf inflation has nothing to do with it, a surprising play in the retail sector could occur in the short term. That’s especially the case if he can put in a repeat performance after a better-than-expected April.

“Americans continued to pump money into the US economy in April, with an increase in retail spending offering the latest sign that consumers are driving demand at stores and manufacturers despite the pinch of high inflation. “said a Wall Street Journal report.

“Retail sales — a measure of spending in stores, online and at restaurants — rose 0.9% seasonally adjusted last month from March, the Commerce Department said Tuesday,” adds The report. “This marked the fourth consecutive month of higher retail spending.”

Spending behavior represented a sign of the times, namely high gasoline prices. Additionally, he has shown a willingness to return to public places after the pandemic’s social distancing measures.

“Consumers spent more at restaurants and bars and increased their spending on vehicles, furniture, clothing and electronics,” the report said. “They cut gasoline spending sharply in April as prices at the pumps briefly retreated after a war-related spike in Ukraine.”

Of course, inflation could be a major headwind going forward. The US Federal Reserve must view this data with a heightened level of hawkishness, which means more interest rate hikes are on the way.

Still, if traders want to play on the idea that consumers will open their wallets again in May, there are retail exchange-traded funds (ETFs) to make the jump.

A retail ETF to play

One way to give the retail sector a bet is to ETF Direxion Daily Retail Bull 3X (RETL). RETL targets daily investment results equal to 300% of the daily performance of the S&P Retail Select Industry Index.

With its triple leverage effect, RETL gives investors the opportunity to:

  • Magnify short-term perspective with 3X daily leverage;
  • Go where there are opportunities, with bullish and bearish bottoms for both sides of the trade; and
  • Stay nimble, with liquidity to trade in fast-moving markets.

The ETF invests in securities included in the index, which is a modified equal-weight index that measures the performance of the stocks comprising the S&P Total Market Index. So far in 2021, the fund is up nearly 130%.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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