Interesting article and there’s a ton of data in here to ponder as you prognosticate about the future of the economy and the stock market. A “Trump Dump” recession is inevitable and the slump in demand for debt from construction to credit cards and auto loans is strong leading indicator (see excerpt, below.) If you are 35 or 65, sell all equities and get out of the stock market, immediately!
The overall trend for credit demand going forward is not looking good with the latest results from the FED senior loan officer survey. Indications for demand for debt for Construction, credit cards and auto loans are all down at multi year lows.
This is important as credit demand overall has been tied to overall demand within the economy and especially with consumers. If the intentions from the survey follow through, the slowdown in the economy will begin to gather pace with the higher probability of the US starting a recession in 2017.
Auto sales have performed very strongly since hitting the lows in 2009, with demand for auto loans driving a large proportion of retail sales demand. Auto sales have recovered strongly also because interest rates for auto loans have fallen substantially over the last 7 years from the FED dropping interest rates and pushing down bond yields via QE purchases. This has allowed buying a new car more accessible for consumers and allowed consumers to own more expensive models that previously they have not been able to afford on higher interest rates.
Auto sales Decline Y/Y First Time Since 2009
The strong performance of auto sales bubble appears to be over as December and January figures have been very weak. Making things worse y/y auto sales have recorded its first decline since 2009 the same year the US experienced a recession.
The data below shows the big 4 car companies in terms of autos units sold all experienced declines in y/y figures. Since the FED senior officer survey results for demand for auto credit is also falling, US car sales declines will most likely continue in 2017.
Here’s a link to the full article: http://www.valuewalk.com/2017/02/stocks-bullishness-record-danger/