Reinvesting The Dividend
Franklin Templeton analysts say “consumers have spent only about 25% of the drop in energy prices and the rest has gone into savings and paying down debt.” They offer two reasons for why cheaper fuel hasn’t spurred consumer spending: 1) “people think the cheap gas is temporary,” and 2) “an usually cold and snowy” blah blah blah. Meanwhile, “US drivers consumed the most petrol for the month of January in seven years…totalled 8.7m barrels a day in January, up 6.2 per cent from the same month a year earlier…about 9.5 per cent of estimated world liquid fuels consumption for the month…US traffic volumes had grown 4.9 per cent on the year in January to 237.3bn vehicle miles.” Meanwhile, Toyota’s North America CEO says “March auto sales are strong as buyers continue to favor light trucks over cars…sales volume is almost 55 percent truck and SUV…In February, industry car sales fell 1.4 percent as light truck sales were up 12 percent. Larger SUVs had an especially strong month.”
“China’s Stock Market Sure Looks Like A Bubble”
People are pretty worried about Chinese equities: “Now they’re nowhere near their 2007 highs — in fact, they’re barely halfway there — but Chinese stocks are still looking plenty frothy right now…[They’ve] been the world’s best performing asset class the last nine months, up almost 80 percent. And that’s despite the fact that China’s growth has slowed to a 20-year low and its industrial profits just fell 8 percent. Why are stocks up so much if the economy isn’t?” (Why why why) Meanwhile, one analyst says that “consumer confidence has surged to its highest level in recent years, a highly unusual development considering the weak growth environment,” which is a pretty good point to be making about Developed Markets–oh, nevermind. To be fair, this should raise a brow or two: “the securities companies that have facilitated the stock market boom are capitalizing on their own ballooning share prices by issuing huge amounts of new stock, raising billions in the process…Increasingly, [Chinese investors] are turning to margin financing, or borrowing funds from brokerage firms to buy stocks — raising the risk of even steeper losses for ordinary investors if the boom turns out to bust.” Meanwhile, Reuters is picking up on rumors about Chinese deposit insurance to arrive in May.