'Cash for Clunkers' helped July retail sales, but not enough
David Rosenberg, Chief Economist and Strategist at Gluskin Sheff, said that the data was "simply awful" in a client note obtained by DailyFinance. "We can have all the inventory building in the world but it can't last without a revival in final sales... If there was ever going to be a month where retail sales were going to rise, this was it -- due to the 'successful' Cash-for-Clunkers program. The program may be a 'success' but all the government is really doing is taking away from future spending."
Rosenberg, who was noted for his bearish forecasts as the head economist at Merrill Lynch, touched on other economic data points -- including foreclosures, which increased seven percent from the prior month, despite pressure by the Obama Administration to keep defaulted borrowers in their homes. He also said that initial jobless claims, which edged higher to 558,000 last week, remained elevated and that job growth would remain elusive for some time. Likewise, declines in continuing claims should only be viewed as people exhausting their benefits, and not as a positive sign of an improving labor market.
In the face of poor data, market sentiment has reached a level of bullishness not seen since the summer of 2008. The last time Rosenberg's two surveys reached such bullish levels, the market fell between three percent and six percent in the following month. The "revenue-less recovery" rolls on, even as Rosenberg says only the health care and material sectors are actually seeing improving investor guidance from management.
James Cullen edits and writes at CollegeAnalysts.com. He has no personal position in the stocks mentioned above.