The NASDAQ opened flat on Tuesday July 14th amid disappointing data in retail sales. Abroad, investors remain uneasy about talks surrounding Greece’s bailout package.
European shares turned lower on Tuesday after a four-day rally due to uncertainty over whether the measures would be passed in Greece’s parliament. The yield 10-year German bond was at 0.87%, marginally higher on that day. Following the sharp drop on Monday, the euro was 0.21% .
Retail sales jumped in May, suggesting the U.S. economic recovery is picking up momentum.
On Thursday, June 11, the Census Bureau reported better-than-expected retail and food services sales. For the month of May, total retail and food service sales came in at $444.9 billion, representing a 2.7% increase compared to same time last year. The Bureau also revised its April sales figures upward to 0.2%. (Source: U.S. Census Bureau, June .
Economic data coming out of China does not look good. At the very least, they’re collectively saying that Chinese economic activity is slowing at a staggering pace.
China’s Dismal Factory Output, Retail Sales, and Investment Miss Estimates
April’s factory output increased 5.9% year-over-year, beating March’s 5.6% increase. However, the growth is slightly less than the six percent expected by analysts. Moreover, the 5.6% reading in March was the lowest since .
I am not surprised that the retail sales remained unchanged in April. Although warmer weather is upon us, the April retail sales data did not warm up the way the industry would have liked.
Retail Sales and Consumer Confidence Fading
After barely growing in the first three months of 2015, U.S. retail sales were flat in April and continue to disappoint. Consumers cutting back on their purchases could be an .
Look at any newspaper or watch any financial news channel and you will hear someone saying the U.S. economy is growing. To prove their point, they will refer to gross domestic product (GDP) figures and unemployment data.
Yes, the GDP numbers and the unemployment picture do look better, but our economy is still in very big trouble.
Three Statistics That Say No Economic Growth Yet was last modified: June 5th, .
In two weeks from today, all eyes will be on Black Friday and the official beginning of the holiday shopping season, which for some in the retail sector is the most critical time of the year.
While I do expect consumers to be out and spending in full force, I’m not sure about the retail sector and margins. The decline in gasoline prices should help add some money to the .
It’s widely expected that at the end of this month, the Federal Reserve will end its third round of quantitative easing (that began in September of 2012). This is QE3, where the Federal Reserve was printing $85.0 billion of new money every month and using it to buy U.S. Treasuries and mortgage-backed securities (MBS). In the beginning of 2014, the Fed started reducing the amount of money it was printing .
Over the past few months, I warned my readers the stock market had become a risky place to be. While I also suggested euphoria could bring the market higher than most thought possible—to the point of irrationality—the bubble has now burst. Key stock indices are falling and fear among investors is rising quickly.
Please look at the chart below of the Chicago Board Options Exchange (CBOE) Volatility Index (VIX). This .
A good gauge for me on how consumers in the U.S. economy are faring has always been the statistics coming out of Wal-Mart.
Wal-Mart Stores Inc. (NYSE/WMT) reported its operating income in its second quarter (ended July 31, 2014) declined by 2.4%. Its subsidiary, Sam’s Club (wholesale store), saw its operating income, after taking out fuel, decline by 10.2%. (Source: Wal-Mart Stores Inc., August 14, 2014.)
For its entire 2015 .
An economy is said to be technically in a recession when it experiences two consecutive quarters of negative gross domestic product (GDP) growth.
The biggest portion of the U.S. GDP calculation is consumer spending; then comes investments, government spending, and, finally, net of exports. By far, consumer spending is the biggest factor in calculating GDP. All you need is a slight decline in consumer spending for GDP to fall.
Immediate term outlook:
The bear market rally in stocks that started in March 2009, extended because of unprecedented central bank money printing, is coming to an end. Gold bullion is up $1,000 an ounce since we first recommended it in 2002 and we are still bullish on the physical metal.
Short-to-medium term outlook:
World economies are entering their slowest growth period since 2009. The Chinese economy grew last year at its slowest pace in 24 years. Japan is in recession. The eurozone is in depression. With almost half the S&P 500 companies deriving revenue outside the U.S., slower world economic growth will negatively impact revenue and earnings growth of American companies. Domestically, America’s gross domestic product grew by only a meager 2.3% in the second quarter, which will negatively impact an already overpriced equity market.
Estimates Aug. 30, 2015
Trailing 12-month EPS for Dow Jones companies (Most Recent Quarter)