All Production / No Consumption

We are talking here about how the current Washington Programs are directed.  Yesterday the market failed to follow though on the “Great Again” happy talk. Today we are seeing a bounce back to the current median point.  Until we see definitive fundamental data on the economy this pattern of Happy talk Rally’s and Reality sell-offs will continue. Traders can buy dips and sell rally’s until the fundamentals harden.

What about Coming Fundamental data..

  1. First quarter earnings will be the next shoe to fall.  Originally the analysts were looking for a 9 percent increase, now it has dropped to an expected 7 percent increase, a 4 percent increase would not surprise us.
  2. The reflation trade which started around February 2016, was a kind of an oil based trade, and petered out after 4 months.  Continued talk of a new oil rally seems without merit.  Oil producers are hurting, the Saudi’s want investors to buy come of their production assets.  Per capita income in Russia is down some 40 percent in the past 3 years, things are not well in the oil patch, they need to produce more.
  3. First Quarter GDP looks around 1 percent, well down from the ideas of just few a few months ago.
  4. Second quarter GDP stands to be an even bigger surprise, maybe even negative.  I subscribe to the “windshield survey method of economic activity”, i.e , how do things look when you drive around, I see a lethargic retail environment, a lot of leasing signs, a lot of empty space.  No doubt some of that is because of all the build-out of capacity due to cheap money over the past 5 years.

And what about the Consumer..

The disconnect between confidence and buying would seem to be a ready made project for the behavioral economist group.

And the Tracking Funds..

Their NAV’s seem to be locked into a tight range waiting for something significant to happen. EXTH, the “Trump Failure Portfolio” is up 2.5 %, ECT, the “Trump Success Portfolio is flat at 0.0 %”.


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