UNRAVELLING RETAIL SALES AND PAYROLL HEADLINES.
November 6, 2019 6 Comments
strange behaviour – payrolls and sales (article)
retail sales 2016+ (spreadsheet)
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THEPLANNINGMOTIVE.COM 
Several corrections: “(02/111/2019)” should read 02/11/2019. I suggest using the “Nov 2, 2019” format since date formats vary around the world. In the US 11/02/2019.
Also “l=relative fall”.
And “This rally is without foundation. FactSet’s latest insight dated 1st October”. I believe you meant 31st October.
NICE exposing Apple’s earnings nonsense. Indeed earnings data is out there for everyone to see but instead, everyone wants to see and believe the fairy tale that Wall Street and Corporate America spin with such skill promoting “adjusted” earnings and promoting “forward earnings growth,” which is always huge, and as the reporting date moves closer, those expectations are lowered.
I’m confused however about Apple’s P/E though. “In September 2019 this ratio rose to 16 ($255 x 4.52 billion billion divided by $63.9 billion)”. (Note the “billion billion”) but my confusion arises from your math.
$255 x 4.52 / $63.9 = 18 not 16. Also, according to Yahoo finance it’s 21.88 (TTM). I’m wondering about the discrepancy.
I will be posting a comment on part 1 regarding the rise in retail sales.
Thank you and Verity.
I need an editor. Thanks for the corrections. There would be a discrepancy with Yahoo which is forward looking. Having seen the latest factset it looks as though corporate profits are down 10%. Next week bringing out article on measuring fixed capital. Promise to proof it more rigorously.
And I promise to be more careful when posting my comments. I did it again. My comment above was meant for “Part 2. QUARTERLY MOVEMENTS IN TURNOVER, CAPITAL AND PROFITS.”. Sorry about that.
Apple P/E of 22.88 is TTM. Forward is 17.5.
Fantastic! Comparing payroll to hours and that the average work week has actually declined. This is the so called gig economy where part time temporary contractors such as Uber drivers and Amazon delivery drivers distort employment picture.
Regarding higher retails sales, which you are attributing to several factors including tariffs, a couple of observations:
1 – Not seasonally adjusted, retail sales in September fell 8.9% from August.
2 – Total auto loans and leases outstanding for new and used vehicles in the third quarter rose 4.3% from a year ago, by $50 billion, to a record of $1.19 trillion. This 4.3% rise in auto loan balances outstanding has occurred despite new-vehicle unit sales that declined by 1.6% so far this year and despite lackluster used vehicle unit sales. The point being that used vehicles were produced in the past quarters/years not current production and their prices had been rising because new vehicles have become out of reach with average transaction price of $38,000. As far as I know used vehicle sales are also factored in retail sales. Including parts it makes up around 20% of retail sales.
3 – Commodity prices have been rising. This is a deliberate act and not in response to rising demands and or costs. Case in point is wine. In that industry it is referred to as premiumization and has resulted in bloated inventories. See this short article https://www.drinks-today.com/wine/analysis/wine-premiumisation-doom-loop.
I tend to agree with you that “It may very well be the case that the Census Bureau is understating retail inflation”.
Thanks for another interesting and informative post.
Thank you for these insights. What I found interesting is that it was high end vehicles that declined in particular. When reading the balance sheet of Fords, GM etc value compensates for volume because of the positive mix of sales. So the fall in value this time is important.I am reminded of the comment made by the President of the American Automobile Association who said the new car market was essentially driven by the top 10% of society, meaning he only considered light trucks, SUVs as the market, not lower priced sedans.
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