THOUGHTS ON THIS MORNINGS DATA

Another mixed bag of data this morning.  Most alarming is the continuing trend in negative consumer data.  As we all know by now, yesterday’s retail sales data was weak at best – something we’ve been reporting on here at TPC weekly thru our ICSC and Redbook data reports.

Consumer sentiment readings continue to trend in-line with broader spending habits.   This morning’s reading came in at 63.2 – almost 5 points below consensus.  This continues to represent the broader economic themes we are seeing; deflation in the things we own and inflation in the things we need.

CPI came in flat which is reflective of the sluggish economy.  This morning’s data was in-line with estimates at 0%.  The lack of pricing power across the broad economy is in-line with the lack of expansion in corporate revenues.  There is little demand for goods and even less pricing power.  I’d love to spin this into a positive, but it simply displays the death grip that deflation continues to maintain on the broad economy.

On the bright side, capacity utilization and industrial production posted slight improvements.  This is a clear sign that the recession is likely to end in the upcoming quarter.  Unfortunately, the rebound in both indicators show clear signs of the sluggish and below trend recovery we are likely to see.  It won’t be a technical recession, but it will probably continue to feel like one.

All in all, this morning’s data nicely summarizes the themes we continue to focus on here at TPC.  The consumer is weak, deflation remains the bigger concern and the recovery (if we can call it that) is likely to be far from v-shaped.   As for the markets, complacency remains the name of the game.  Own equities at your own risk – which I believe are highly elevated currently….