Market Exodus

Maybe it’s a gut feeling based more on a lack of confidence in the economy and a very dramatic race for the White house; maybe it’s concerns about the Fed hiking rates. Maybe its general worries; selling begets selling that further begets more selling.

Coming into the week, investors were selling equities hand over fist. In fact, according to Investment Company Institute (ICI), there were outflows of $13.4 billion in equity exchange-traded funds (ETFs) and $3.0 billion in Funds. Altogether, the past five weeks before this week saw more than $50.0 billion in equity outflows.

I think people are fooling themselves if they think this market is reacting to good news, even if retail sales and consumer confidence are much better than expected. There is an uncertainty that’s never really gone away throughout the entire recovery; it just becomes more pervasive from time to time.

Key Support

The Dow Jones Industrial Average closed right at its 50-day moving average on Friday. The inability to hold leaves the index vulnerable to its 200-day moving average of 17,292 and the next support thereafter is 17,000.

Too Much Stuff

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STOCK MARKET

The big news of last week was the spike in U.S. Retail Sales, but which chart is more reflective of the state of the U.S. economy? Is it the sales numbers or J.C. Penney (JCP) that was hailed as a savior ready to reconquer the world months ago?

A Closer Look

As I look around my house from time to time, I feel as though we have too much stuff. In fact, I am embarrassed at how many televisions we have in the house. I could go without new clothes for years, but my tailor is working on three new suits right now.

And we have so many electronic gadgets in the house that I am still trying to figure how to operate stuff in the junk drawer (which is more like a closet these days) that’s functional, but obsolete because it’s a couple of years old.

I don’t think my home is unique in that regard- as a nation; we have a lot of stuff and don’t need any more for now.

When the latest retail sales report was released, it came in better-than-expected, but it also reflects some of the angst in the stock market. The Internet is on fire; it looks as though we are buying clothes as a replacement decision more than keeping up with the latest looks.

In addition, we are sprucing up the house by buying new furniture and fixing the garden (my wife and daughter have been making an amazing garden in our backyard dedicated to my Mother). However, fewer people want to make that trip to the mall, especially when it comes to department stores.

And we are taking gas savings to local restaurants.

The problem with these trends is that a lot of people work in those brick-and-mortar malls and department stores. As creative destruction takes full control of the retail process, I am sure many malls will morph into distribution centers or even housing communities. (There’s a Bloomingdale’s near me that would be the ultimate house.)

Make no mistake, consumers are hoarding money for a variety of reasons, and we are living more for the moment in order to enjoy things such as our homes.