Weekly State Of The Market: Segment 1

(Video length 01:19:17)

Welcome to Finom Group's (for whom I am employed) weekly State of the Market (SOTM) video. Within this week's SOTM we dive into some of the more recent economic data releases with great detail and analysis. Please click to review the video. To direct the chronology of the video and streamline conversational points of analysis and interest, we offer the following outline:

  • Consumer Price Index (CPI) discussion. Inflation is lacking in economy for specific reasons related to "price transparency discovery" activities that didn't exist prior to online sales/e-commerce. (2-12 minutes in)

  • Auto loan delinquencies increase in the subprime segment to 7 million. Auto loan delinquency rate increase not in keeping with out delinquency rates in the economy like household, credit card and/or student loan delinquency rate. Auto loans seem an outlier consistent with habitual activities in the millenial consumer demographic.  Deep dive into the debt/delinquency aspects of the consumer market. (13-23 minutes in)

  • Monthly retail sales data for December 2018. We discuss the disparities in the sales data that include Nonstore sales outlier from the last 10 years, gas station sales tied to the dip in crude oil supply/demand imbalance that occurred in Q4 2018. The Sports Authority and Toys R US produced a one-off disparity in the Sporting Goods and General Merchandise sales categories. (24-40 minutes in)

  • GDP revised lower post the release of December monthly retail sales data by Moody's and the Atlanta Fed (40-44 minutes in)

  • Taking a look at market correlations and the strength of the U.S. Dollar Index (DXY). Coca-Cola FY19 guidance impacted by the strength of the U.S. Dollar. (44-47 minutes in)

  • General Market discussion on YTD market rally and latest market reactions. How to best prepare for the next market pullback. Uncertainty around economic strength or weakness and Q1 earnings will provide a gap in market sentiment that may produce pullback. Important to know how to navigate market pullback. New and fascinating economic and demographic changes in society (47-105 minutes in)
  • Let's talk about market volatilty. A look at VIX Futures Term Structure and very light contango. Not a good signal presently to guide volatility style trading strategies. How we are presently trading volatility and managing account liquidity in order to build a larger short-VOL position should a market pullback coincide with heightened volatility near-term. Dangers of participating long-VOL. Hedging using long-against-the-box within a short-VOL trading strategy (short TVIX/VXXB with smaller long UVXY-hedge). (106-113 minutes in)
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