Wednesday, December 16, 2015

Charts: Retail & Auto Stocks


Charts
Followers of headlines rather than the message of the market should continue whistling past the graveyard of economic reality as the Fed likely begins raising rates in December. Headline reminding us that consumers should keep spending, thus, supporting economic growth regardless of Fed policy ignore the following: (1) the Economic Activity composite (EAC), a leading measure of US economic activity, has been contracting for nearly a year, and (2) retail and auto stocks, also leading measures of US retail sales and economic activity, have been under performing the broader even longer (see comments). As long as headlines refuse to discuss either of these trends, an intellectually lazy majority remains oblivious to a business cycle transition already underway and, more importantly, growing probability of an economic and/or financial panic by 2017.

Charts must be viewed within the context of sentiment, price, leverage, and time, and the cycle of accumulation and distribution.

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