Search
Close this search box.

QUOTE OF THE WEEK


“Life shrinks or expands in proportion to one’s courage.” – Anais Nin


TECH CORNER


Today I want to talk about the U.S. consumer. The general assumption is that the consumer is in good shape but the truth is that the consumer, on a national basis, is now spending 5% more than their income. There is an old saying that goes “What can’t go on forever, won’t.” 50% of American households are living paycheck to paycheck. Credit card balances are up 17% year over year and to compound the problem, credit card interest rates have risen 5% over the last year.
Now let’s take a look at some statistics. The graph below shows that the consumer is now starting to default on consumer credit cards. In other words, they are tapped out. Also, the number of foreclosures and bankruptcies are rising. The important take away for the graph is the rate of change of delinquencies, foreclosures, and bankruptcies. They are rising at a very steep rate and to change direction would require a drastic change.


It is important to remember that the consumer is 70% of the U.S. economy. The consumer is definitely slowing their spending. U.S. Redbook Weekly Chain Store Sales printed another negative number at -0.4% Y/Y, which was slowing versus the prior week. The retail data series started the year at +10% Y/Y and has slowed consistently as the year has progressed.


Another determining factor to the health of the economy is to look at freight shipping. David Jackson, the CEO of Knight Swift Transportation, which is the largest full truckload carrier, said the following on a conference call: “I don’t know that we’ve ever seen freight demand fall this far so fast and for so long without an accompanying recession”


Another indicator that the consumer is pulling back is Industry Shipment of Corrugated Products. Corrugated Products means cardboard. As you can see on the graph below when the use of cardboard for shipments falls below -10% we have had a recession.

The equity markets have had a substantial rally so far this year. What is perplexing is that the rally has happened when all the data is pointing down. Now is not the time to get greedy and jump into the equity markets. The downside risk is infinitely greater than the upside rewards.

If you have friends or family in need of financial life planning services,

It would be the honor of Laurence Lof Financial Advisors to assist them.

We value your referrals!

These are Larry Lof’s opinions and not necessarily those of Cambridge, are for informational purposes only and should not be construed or acted upon as individualized investment advice. Past performance is not indicative of future results. Due to our compliance review process, delayed dissemination of this commentary occurs.

The S&P 500 index of stocks compiled by Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. The Index includes a representative sample of 500 leading companies in leading industries of the U.S. economy. Indices mentioned are unmanaged and cannot be invested into directly.

Technical analysis represents an observation of past performance and trend, and past performance and trend are no guarantee of future performance, price, or trend. The price movements within capital markets cannot be guaranteed and always remain uncertain. The allocation discussed herein is not designed based on the individual needs of any one specific client or investor. In other words, it is not a customized strategy designed on the specific financial circumstances of the client. Please consult an advisor to discuss your individual situation before making any investments decision. Investing in securities involves risk of loss. Further, depending on the different types of investments, there may be varying degrees of risk including loss of original principal.

Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Laurence Lof Financial Advisors, LLC are not affiliated. Laurence Lof Financial Advisors 4757 E Camp Lowell Drive Tucson AZ 85712 info@lofadvisors.com

Sign Up For Our Newsletter

Lof Advisors Logo
Client Login
Cambridge Statements Login
Wealthscape
Login
Pershing
Login
State Disclosure: Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SPIC. Investment advisory services offered through Cambridge Investment Research Advisors, Inc., a Registered Investment Advisor. Cambridge and Lof Laurence Lof Financial Advisors, LLC are not affiliated. Investment products and services available only to residents of: Arizona (AZ), California (CA), Colorado (CO), Florida (FL), Idaho (ID), Indiana (IN), Michigan (MI), Massachusetts (MA), Minnesota (MN), Montana (MT), North Carolina (NC), North Dakota (ND), New Mexico (NM), Oregon (OR), Ohio (OH), Pennsylvania (PA), Texas (TX), Virginia (VA), Wisconsin (Wl), Wyoming (WY). We are licensed to sell insurance products in the following states of: Arizona (AZ), California (CA), Colorado (CO), Florida (FL), Idaho (ID), Indiana (IN), Michigan (MI), Montana (MT), North Dakota (ND), New Mexico (NM), Oregon (OR), Pennsylvania (PA), Virginia (VA), Wisconsin (Wl).
State Disclosure: Due to various state regulations and registration requirements concerning the dissemination of information regarding investment products and services, we are currently required to limit access of the following pages to individuals residing in states where we are currently registered. By continuing to use this site, you acknowledge that you are a resident of one of the states listed. A broker/dealer, investment advisor, BD agent or IA rep may only transact business in a particular state after licensure or satisfying qualifications requirements of that state, or only if they are excluded or exempted from the states broker/dealer, investment adviser, or BD agent or IA rep requirements, as the case may be; and follow-up, individualized responses to consumers in a particular state by broker/dealer, investment adviser, BD agent or IA rep that involve either the effecting or attempting to effect transactions in securities or the rendering of personalized investment advice for compensation, as the case may be, shall not be made without first complying with the states broker/dealer, investment adviser, BD agent or IA rep requirements, or pursuant to an applicable state exemption or exclusion. Check the background of this investment professional on FINRA’s BrokerCheck.
Call Now Button