Synopsis:

Morgan Stanley forecasts a 0.1% decline in headline retail sales for January, but core (control) sales rising 0.3%. Industrial production is expected to increase 0.5%, mainly driven by utilities usage, while manufacturing output sees a modest 0.1% gain, narrowly supported by autos and planes.

Key Points:

1. Retail Sales (Friday, Feb 16)

   • Headline retail sales expected to decline by 0.1%M.
   • Control group sales forecasted to rise by 0.3%M.
   • Wildfires could pose downside risks, but models already account for them.

2. Industrial Production (Friday, Feb 16)

   • Expected to rise 0.5%M, primarily due to higher utilities usage.
   • Manufacturing output up only 0.1%M, with gains narrowly driven by autos and planes.

Conclusion:

Morgan Stanley sees weak headline retail sales but solid core growth, with industrial production gains mostly tied to utilities usage rather than broad-based manufacturing strength. Wildfires present a risk, but historical impacts have been inconsistent.