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RETAIL SALES & IMPORT PRICES
Retail sales last month slipped a bit, the Census Bureau reports. But much of the decline came from the auto and related industries. Given the soft economic backdrop of late, it's no wonder that consumers are reluctant to buy cars, which for most folks are the largest purchase after a house. Otherwise, this was a surprisingly good report, given the dominance of plus signs elsewhere in the column of monthly changes among the broad categories of retail sales. Excluding motor vehicles and parts, retail sales overall rose 0.5% last month. Joe Sixpack seems to be holding up quite nicely in the face of recessionary fear, or so this data series is telling us. So, what's the problem? For some thoughts on that, we turn to import prices, which surged by 1.8% last month, the Bureau of Labor Statistics reports. Sure, that's lower than the nosebleed 2.9% for March. But no one should be celebrating. The United States is importing inflation, and the problem may get worse. On a rolling 12-month basis, import prices are rising by 15.4% through April, which is the highest since at least 1990 (the monthly data doesn't extend further back). The point here is that the prices of imports are skyrocketing. The weak dollar is a key reason. As the buck sinks in value relative to foreign currencies, the result is higher prices for Americans. The hope is that the dollar will stabilize or (gasp!) rise a bit. But for the moment, that's just a hope. There's been some recovery in the U.S. Dollar Index this month, although it's not yet clear if that represents a sustainable reversal or just noise. Meanwhile, it's true that a fair share of the bubbling in import prices can be blamed on petroleum prices. But even after excluding oil and gasoline from the mix, import prices are still rising by a lofty 6.2% on an annual basis, as of last month, as our chart below shows, which is well above the 4.0% annual pace of consumer prices, as of March.
If this keeps up, Joe Sixpack will be more than just pinched—he'll be run over with a bus, or two. Indeed, imports overall are significant slice of the U.S. economy. Last year, U.S. imports totaled $2.3 trillion, or about 16% of GDP. Imports as an economic enterprise are too big to ignore. The same goes for import prices. The only question: When will the consumer start paying more attention? by James Picerno (CapitalSpectator.com) Disclaimer: Please note that charts and commentary provided by the moderator are for educational purposes only. Any trades placed upon reliance on the moderator’s charts or information is taken at your own risk for your own account. Past performance is no guarantee of future results. While there is great potential for reward trading stocks, futures and options, there is also substantial risk of loss and you must decide your own suitability to trade. Future trading results can never be guaranteed. This is not an offer to buy or sell stock, futures, options or commodity interests. Most trading systems are based on historical formulas which have worked in the past. However, what has happened before may or may not happen again. You can lose all your money trading stocks, futures, and options and you must decide your own suitability as to whether or not to trade. Only trade with true risk capital you can afford to lose. Only trade markets you can properly afford to trade. Properly funded trading accounts typically perform better than those that are not. Never risk more than 2-3% of your account on any one trade. Always define your risk before entering a trade and place a stop to limit your risk. There are no guarantees or certainties in trading. Trading involves hard work, risk, discipline and the ability to follow rules and trade through any tough periods during a system’s draw downs. If you are looking for a guarantee, trading is probably not for you. Most people lose money trading. One of the reasons is that they lack discipline and are unable to be consistent. A system can help you become consistent. Ironically, worrying about the monetary aspect of trading can contribute to and cause a trader to make trading errors. Therefore, it is important to only trade with true risk capital. |
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