Despite strong retail sales data, the various retailerscontinue to report disappointing numbers while offering negative guidance goingforward. The latest to visit the 1st quarter confessional is Target, while they beat the earnings number, revenuemissed and they slashed guidance for the second quarter. In fact, while retail sales data has more orless continued its up and to the right trend tracking Standard and Poors retailstocks in the process this relationship broke in mid-2015 as sales data keptgoing up while retail companies started going south.
I continue to note that while all of the so called expertspromote the everything is wonderful meme at every opportunity they studiouslyavoid discussing trade and shipping data, both of which are going south in abig way on well-established trends. Earned income growth or more accurately it’s contraction was alsostudiously avoided until quite recently. The 3rd significant issue is of course debt and in particularthe wisdom of trying to fix the problems caused by too much debt with even moredebt. I’ve always said that Japan willprove the Canary in the coal mine. Thefailure of Abenomics aka negative interest rates, print money and buy stuffwhile ballooning already painfully high debt levels serves as a preview of whatheavily indebted developed western economies face in North America andEurope. Policies that encourage recklessspeculation in a hunt for yield leading to destabilizing asset bubbles, whileputting all manner of pension programs behind the 8-Ball. Let’s hope that the financial wreckage causedby this bubble doesn’t dwarf that seen with the last one.
This is Caleb Lawrence Registered Investment Adviser Inc.Scotts Valley Drive and Willis Road in the Scotts Valley Plaza, Suite 202 orcall me toll free at 888-RICH PIG / 888-742-4744.
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