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Which is most important?

Nick Kalivas

Tell me which picture is most important to your market outlook:

1) Chain store sales

Generally, retailers have been cautious with their outlooks for the second half of 2013.  The level of disappointing earnings in the retail sector and fear of Fed tapering have played a role in keeping the S&P 500 under 1700.  However, weekly chain store sales don’t suggest material weakness or a change in consumer spending patterns at this point.  The graphic benchmarks weekly chain store sales since 2008 from the 29th week of the year (about mid-July) through the 37th week of the year (just after Labor Day).   The graphic is an attempt to game this year’s back to school activity relative to recent years. The two thick lines represent the maximum and minimum values, while the thin dashed line is the five year average (2008 to 2012).  The line with the squares representing the data points is 2013. 


2) Gallup’s unemployment survey

Last week, Gallup’s unemployment survey made news because it suggested a surge in the unemployment rate.  The survey indicated that unemployment had jumped sharply, rising about 1.0% from mid to late July to 8.8% during the August 20-22 period.  The survey has been overshadowed by a sharp drop in unemployment claims, but may find greater following if government employment data released in early September shows similar results.


3) Investors piling up cash

Investors are staring to pile cash on the sidelines.  With the deep sell off in the bond market and correction in stocks, investors have been reducing exposure to both markets.  According ot the Investment Company Institute, money market fund assets have risen over $25 bln in the past three weeks. The yield on cash is zero, so investors are likely to tire of this return.  This cash build up may be a positive for stock prices into month end.  

Let me know your thoughts below.

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