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Business/Finance See other Business/Finance Articles Title: My Mantra for the Markets: First There, Now Here My Mantra for the Markets: First There, Now Here Mike Larson | Wednesday, October 14, 2015 at 4:20 pm “First There, Now Here.” That’s my mantra for the economy and the markets. By that I mean, the economic and market turmoil started predominantly overseas. I’ve chronicled the meltdowns in several emerging markets like Russia, South America and Asia. I’ve also written about the more recent widespread deterioration in conditions in China — the world’s second-largest economy. But unlike most of the conventional Wall Street crowd, I’ve also said the problems won’t stay bottled up overseas. They’ll wash up on our shores. Hence the “First There, Now Here” mantra. We got the first major taste of that in the September jobs report, which was pretty darn lousy. Then today, we got more confirmation of problems on the retail spending and inflation fronts. Deflation is now a rising concern regarding the U.S. economy. Overall retail sales rose just 0.1%, half the gain expected by economists. August’s 0.2% gain was revised down to nothing. Retail sales excluding autos fell 0.3% — the biggest drop since January. And the so-called “control group” figure that is used by the government to estimate Gross Domestic Product growth fell 0.1%. Seven out of 13 product categories showed declines. What about the Producer Price Index? The wholesale inflation gauge dropped 0.5% in September after flat-lining in August. That was worse than the 0.2% decline economists were expecting. It wasn’t just energy or food dragging down the index, either. So-called “core” prices fell 0.3%, compared with forecasts for a 0.1% gain. One separate index that economists prefer showed the worst deflation (-0.3%) since the government began calculating it in 2013. See what I’m getting at? This is a domestic economy that’s clearly starting to decelerate, dragged down by slowing world growth, tighter credit markets, the problems in energy, mining, and manufacturing and more. Production cutbacks and layoffs tied to the over-accumulation of inventories will come next. “Markets lack both healthy earnings growth and a healthy underlying economy.” Stocks aren’t GDP futures. They rise and fall for all kinds of reasons. But when markets lack both healthy earnings growth and a healthy underlying economy, they have a tougher time racking up powerful, sustainable gains. So keep that in mind, especially with the Dow Industrials 1,100 points off their lows in late September. What do you think of the latest sales and inflation figures? Do they point toward a serious problem for the U.S. economy? Or do you find reasons for encouragement in them? Should we even be worried about the macroeconomic backdrop, or is it still all about easy money? Join the discussion at the Money and Markets website when you have a chance. Poster Comment: Reader's comments at source. Post Comment Private Reply Ignore Thread
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