Special Encore: Bracing for Sticker Shock

This episode of "Thoughts on the Market" discusses the delayed impact of US tariffs on import prices and retail margins. Andrew Sheets, Head of Corporate Credit Research at Morgan Stanley, interviews Jenna Giannelli, Head of U.S. Consumer and Retail Credit Research, to explore why the effects of these tariffs haven't yet significantly manifested in inflation data. Giannelli attributes this to several factors, including existing retailer inventories, mitigation strategies employed by companies (such as shifting production and vendor negotiations), and the tactical use of price increases. She predicts that the impact of tariffs will become more evident in the third and fourth quarters, particularly affecting certain retail sectors more than others. The conversation concludes with a discussion of how these delayed price increases could impact macroeconomic forecasts, particularly regarding inflation and Federal Reserve interest rate decisions.