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Sunday, 13 November 2022

US equities are having a better time + Beauty product sales are on the up and up, even as inflation continues to bite

US stocks had their best day since 2020 on Thursday in the wake of weaker-than-expected inflation data that could allow the Federal Reserve to begin to slow the pace of its interest rate hikes.

By the numbers: The tech-heavy Nasdaq surged 7.4% while the S&P 500 closed 5.5% higher. The Nasdaq finished the week 8.1% higher and the S&P was up 5.9%.

Price pressures eased in October: Inflation data published Thursday showed that consumer prices grew by 7.7% in October, down from 8.2% the month before. This is the lowest rate since January and came 0.3 percentage points below expectations.

Not so fast: Not joining in with the optimism are some of Wall Street’s biggest fund managers, who are maintaining a level of caution about how inflation will play out in the months ahead. JPMorgan and UBS are among a group of asset managers who believe that high inflation is here to stay and are holding onto their defensive positions, according to Bloomberg.

Beauty product sales are booming, distinguishing the beauty industry from other industries facing diminishing demand due to inflation-cautious consumers, The Wall Street Journal reports. Coty Inc. — maker of Bourjois makeup and Hugo Boss cologne — saw 9% y-oy growth in organic sales in 3Q 2022, marking the company’s sixth consecutive significant quarterly sales rise, after sales plummeted during the pandemic. E.l.f. Beauty Inc., which makes low-cost makeup, reported a 33% y-o-y sales increase last quarter, while L’Oréal’s rose 9% y-o-y during the quarter.

Demand for luxury goods is unfaltering — but drugstore products are flying off the shelves: Coty’s luxury fragrances and cosmetics are seeing strong demand, reaffirming that luxury goods remain robust despite a looming recession. But mass-market products are also seeing strong sales growth, as consumers with smaller disposable incomes continue to buy lower-priced cosmetics and skin products. This trend comes as beauty products are a (small) luxury that most people can afford even on a limited budget, which mentally limits their feeling of cost-cutting, analysts say.

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