Registered Investment Adviser Caleb Lawrence
The major averages struggled to begin the week, giving up their early gains after the Fed warned about uncertainty, so much for Janet Yellen’s strong economy comments last week, to enter the final hour with small losses despite generally positive data. The February Chicago Fed National Activity Index or CFNAI gained .39 to +.34 on strength in Employment, Production, and Sales. Personal Consumption stayed negative despite a small gain. The 3-month moving average advanced .18 to +.25, a third positive reading on a more than 2-year high for an index that covers about 85% of the economy.
As has been the trend recently the first quarter retail carnage involving store closures and retail bankruptcies continues into 2017. Looking a little closer at the retail sector finds sharp declines in shopper traffic, amid price declines and discounting. Also of note while new car sales are booming, used car sales struggle with significant wholesale price declines indicating inventory is outstripping demand a trend that since the new millennium has gone hand in hand with severe economic dislocation and popping asset bubbles. Delayed tax refunds are probably part of the story with respect to retails troubles but the used car pricing trend has been going on for 8-months, and has accelerated sharply in the last few months.