Re-posted at dShort.com)
“…retail sales numbers for February…came in stronger than expected in both the headline print (+1.1%, on expectations of a +0.5% rise), the Ex-Autos (+1.0%, Exp. 0.5%), and the Ex-autos and gas (0.4%, Exp. 0.2%). While this is certainly optimistic news that the consumer is "out there spending," which is crucially important for an economy that is 70% based on consumption, it doesn't really tell us much about where consumers are actually spending money or the trend of data overall.
“While the headline seasonally adjusted number showed a surge in retail sales in February - the actual
data showed a decline."
My cmt: That is again due to seasonally adjusted data. Lance suggests in his analysis that non-seasonally adjusted (NSA) data is a better metric if it is smoothed with a 12-month moving average. He continued:
"When digging into the retail sales numbers we find that
sales of gasoline jumped by 5% and food and beverages rose by 0.8%. These two
items made up roughly half of the entire increase in February's retail sales.
This is critical because individuals weren't buying more gallons of gasoline,
they were paying more for the same amount. The same goes with food and
beverages. This means there is less money available for other discretionary,
leisure and luxury items. Not surprisingly, there were declines in precisely
those areas including furniture, electronics and appliances, sporting goods and
music stores.
The next chart utilizes the smoothed NSA retail sales
data to look at the annual change in retail sales.
Chart from http://advisorperspectives.com/dshort/charts/index.html?guest/2013/LR-130314-Fig-3.gif
(Originally posted at StreetTalklive.com)
“Despite commentary to the contrary, the decline in
incomes from higher taxes, stagnant wage growth and rising costs of living is
impacting the average family's ability to maintain their current standard of
living. Of course, this is also why the personal savings rate has plunged to
below 3%, consumer debt levels, ex-mortgage debt, are on the rise and
retirement age individuals are still actively employed. This isn't the backdrop
that leads to stronger, organic, economic growth in the future.” – Lance Roberts,
streettalklive.com
Full story at http://advisorperspectives.com/dshort/guest/Lance-Roberts-130314-Retail-Sales-Analysis.php
RECESSION MUSINGS
I am currently reading “The Signal and the Noise” by Nate
Silver. It is a book about
predictions. He spent some time
reviewing the financial crisis and the associated, mostly bad, predictions. He wrote, “In 2007, economists for the Wall
Street Journal forecasting panel predicted only a 38 percent likelihood of
recession over the next year. This was
remarkable because the data would later reveal, the economy was already in
recession at the time.”
As of today, investors are buying cyclical stocks at a
rate that suggests no chance of recession in the next quarter or two.
MARKET RECAP
Friday, the S&P 500 finished down 0.2% to 1561 (rounded). VIX was almost unchanged to 11.31.
Friday, the S&P 500 finished down 0.2% to 1561 (rounded). VIX was almost unchanged to 11.31.
Volume was high today due to the expiration of options. Volume was so high I didn’t believe my usual
source – briefing.com. I went to 2 other
sites and they were all over the place.
I just picked the one in the middle.
NTSM
Friday, the NTSM analysis remained HOLD at the close.
Considering all of the bullishness around, and the long advance, I am a
little surprised to see the NTMS numbers HOLD rather than buy. The underlying numbers are slowing down. All of the bullishness is not reflected in my
analysis.
I got mostly out of the market on 5 March at 1525 on the S&P 500. It is now 1561 so I have given up 2% in gains
by being out. Not much so far and I
think the risk reward situation favors limiting risk.
MY INVESTED POSITION
With long-term funds, I remain about 20% invested in stocks as of 5
March, due to my risk tolerance rather than the numerical NTSM analysis. To put it bluntly, I currently have no
tolerance for risk. (If I were strictly
following the NTSM numbers, I'd still be heavily invested in stocks.) My
reasoning may be found at…
http://navigatethestockmarket.blogspot.com/2013/03/why-i-got-mostly-out-of-stock-market.html
http://navigatethestockmarket.blogspot.com/2013/03/why-i-got-mostly-out-of-stock-market.html
