Retail sales were stronger than expected in August, up 0.7% month-over-month versus expectations for a 0.7% decline. This follows a downwardly revised decline of 1.8% in July. The month-over-month gain in August was driven largely by increases in online shopping, furniture and home furnishings, and general merchandise stores. These gains were partially offset by declines in vehicles, electronics and appliances, sporting goods, hobby, musical instruments, and bookstores, on a seasonally adjusted basis. Excluding vehicles and gas, retail sales were up 2.0% month-over-month, following a 1.4% decline in July. In our view, the August retail sales report indicates that consumers have the propensity to spend but their spending patterns continue to be influenced by the pandemic, with the delta virus outbreak driving more people back to online shopping in the month. Furthermore, we believe high prices fueled by supply chain constraints on bigger ticket items like vehicles and appliances may now be pressuring sales of those items. Overall, we believe consumer spending on goods and services combined, will be highly correlated with US labor market conditions. However, the Covid situation is likely to continue to influence wallet share, as well as supply chains and prices, through the holiday season. Retail inventories are running well below their 5-year average level, and US ports remain congested. We believe retailers with scale and superior supply chain infrastructure will outperform smaller retailers this holiday, given the challenging dynamics.