February 13, 2008
Just as I was thinking that there was a chance that the markets may begin to to stabilize, there is banter around in print and media that has me questioning that thought. It is apparent that there is a disconnect from reality that continues to be reported.
“as long as you can service the debt” is one of the recent comments that has me worried . The truth is that unless personal debt remains constant and income/wages are somewhat stable consumers will have less money to spend and more fear about their future. But that is not what is actually occuring. Layoffs, reductions and a sharp reality check shows that they unless there is a continuation of the bailouts, the future for the consumer is bleak. Not good!
There are many factors that affects markets, no doubt. Yet the overhang and focus is obviously on consumers. A reassessment of credit and a real plan, instead of throwing money at the problem is more in line what should happen. Bailout, Bailout, Bailout is what is desperately wanted and the markets will continue to kick, cry and scream until is gets its way. Yet a bailout will be a monumental mistake that will create immediate relief, but long term pain. Yes, there is a moral hazard concern here!
We will be paying close attention to the export prices which should continue to drift down. That will be good.
Retail sales will assuredly be better than expected since there are no expectations. Realize that his is one of the tried and true tactics for the markets: lower expectations and then report over the expectation. Pathetic as it may seem, it is a regular occurrence.
We are expecting Retail Sales to come up short, but better than expected. OR said another way, not as horrible as is priced into the markets.
This will help to bring the focus back to the idea that we are closing in on a recession status. No doubt, this is an important week.
February 4, 2008
According to Briefing.com, there was significant softness in the auto sector for January. This is having a negative impact on the sector. None of this seems to be a surprise, does it?
Here is their take:
-January domestic light vehicle sales 11.7 mln (-6%).Key Factors
-Poor start to the new year with a -6% decline from December and -8% from a year ago. Weakest pace since July
-Total sales (domestic and imports) ran at a 15.2 mln pace, also the weakest since July
-Compares to average domestic sales of 12.4 mln in 2007, 12.8 mln in 2006.
-Domestic autos fell -8% to 5.1 mln, light trucks -5% to 6.6 mln.
-Imports held at a 23% market share. Averaged : 23% average in ’07, 22% in ’06 and 20% in ’05.
-With 20% of the weight in retail sales, growth in vehicle sales have a significant effect on sales.
Domestic vehicle sales are slowing due partly to stronger import demand and more largely to slower consumer spending on big ticket items. January domestic sales of 11.7 mln compare to a 12.4 mln average in 2007 and 12.8 mln in 2006. Incentives provide some monthly swing amid the downward trend. High gasoline prices provide the advantage to fuel efficient imports and domestic autos but SUV sales have not shown a strong decline given the larger discounts awarded and domestic preferences. Foreign market share has grown to 23% in 2007 at the expense of U.S. manufacturers. With a 20% weight in retail sales, vehicles provide the monthly swing to consumer spending.