5 Powerful Data Points (Ignore at Your Own Risk)
Behind the curtain here at Wall Street Daily, we’re performing minor miracles with data.
For example, an upward trend in the Baltic Dry Index (BDIY) just emerged, warning us that the cost to ship raw materials is rising.
Such data points give us a huge edge when forecasting stock movements.
Another point worth noting is the aggressive spike in the Institutional Index (XII).
XII measures the performance of the 75 public companies held in the highest dollar amounts in institutional portfolios, and its spike cautions that 401(k)s could be getting overexposed to stocks.
Data is power, folks.
With that in mind, here are three more data points currently jumping off the page.
The One Market Amazon Can’t Touch
Retail is a dirty word.
This is doubly true when talking about brick-and-mortar businesses that compete with Amazon.
But believe it or not, not all consumer goods companies are suffering.
In fact, some retailers are absolutely thriving…
The S&P Global Luxury Index tracks 80 of the largest public luxury goods companies.
These are companies that either produce or distribute high-end merchandise around the world.
Some of the index’s constituents include BMW, Louis Vuitton, Ethan Allen, Coach… the list goes on.
In the last year, the Global Luxury Index is up 34%.
That might not seem like a big pop, but it’s more than twice the rise of the Thomson Reuters global retailers index and 13 percentage points higher than the S&P 500 over the same period.
So what’s driving the boom?
Put simply, a burgeoning middle class in China and Europe.
This year alone, Bain & Co. expects 65% of luxury firms to experience sales growth.
Unfortunately, there’s no pure-play exchange-traded fund that tracks the luxury goods index.
But a single stock that investors might want to take a closer look at is Michael Kors Inc. (KORS).
Shares trade at just 13 times forward earnings — a 30% discount to the S&P 500.
And after a stellar fiscal third-quarter report that crushed analyst earnings estimates, the stock has soared to a fresh high.
Best of all, the company has already weathered the worst of Amazon’s onslaught.
One Stat to Rule Them All
There’s one statistic that reveals more about the U.S. economy than anything else: productivity growth.
It tells us how much of a wage increase employers can afford and how much living standards are likely to grow.
And since it impacts the federal budget, it also tells us how much deficit and debt we are likely to have in the coming decades. It can also determine if Social Security and Medicare trust funds will run out of money altogether, impoverishing us all in our old age.
Finally, comparing it with other countries’ productivity growth tells us how the U.S. is doing competitively — and whether China is about to eat our lunch.
Since the 2008 financial crisis, U.S. productivity growth has been absolutely lousy — running at below 1% in 2011–16. Compare that with 2.8% in 1948–73 and 1.8% in 1973–2010.
That’s why U.S. living standards have barely risen since the crisis and why budget deficits are running over $600 billion annually.
There appear to be two causes for the lousy growth:
- The Obama administration’s blizzard of regulation, especially in the environmental area.
- And the Fed’s low interest rate policies, which have made the economy’s resource allocation very suboptimal. Other countries playing with “funny money” — like Britain, the EU and Japan — are also seeing lousy (or even negative) productivity growth.
The good news is things are changing in 2017.
Productivity was up at an annual rate of 1.5% in the second quarter and 3.0% in the third quarter… The Trump administration has at least stopped adding to regulations… and the Fed has raised interest rates closer to normal.
If this continues, we may see better growth, lower budget deficits and maybe even pay raises.
Of course, another recession is overdue. But if Trump and the Fed avoid the errors of 2008, it may be short and relatively painless. Just watch the productivity figures.
Data Don’t Lie…
Over six years ago, I went on the record and predicted that the exploding use of mobile devices promises to be the fastest-growing — and possibly biggest — technological trend ever.
Bigger than the personal computer revolution of the 1990s. Bigger than the desktop internet revolution of the early 2000s. Bigger than the invention of the automobile, too.
Even as smartphone penetration rates hit saturation levels in the U.S., I’m still as bullish as ever that this trend will continue.
Why? Because the data keep telling the same story…
We simply can’t quit our smartphone addictions.
And we just keep finding more and more uses for our smartphones, which translates into more and more mobile data usage.
According to Cisco’s latest mobile Visual Networking Index:
- There’s going to be a mobile device for every man, woman and child on Earth… and then some! Cisco projects there will be 12 billion mobile connections by 2021, representing 1.5 per person on Earth.
- Mobile data traffic is growing twice as fast as global fixed IP traffic (i.e., desktop computers).
- And yet there’s no end in sight. From 2016–2021, global mobile data traffic is expected to increase sevenfold.
So what’s the best way to profit from this trend?
I’m convinced all the easy money has been made by scooping up shares of the smartphone makers like Apple (AAPL).
That means we need to focus on the “guts” of mobile devices that are critical to their operation.
Now, there’s one type of mobile chip that’s enjoying a growth explosion, thanks to the transition to 4G. Costs for this technology have jumped a staggering 2,689% compared with legacy 2G/3G phones.
We’ve found the single best microcap to invest in this boom, and it’s trading for less than $5 per share.
If you’re interested in getting all of our research on the opportunity, make sure you’re a True Alpha subscriber before next week. For details on how to sign up — including an opportunity to turn a single $20 bill into a massive fortune — click here.
Ahead of the tape,
Chief Investment Strategist, Wall Street Daily