ChristopherCarrollSmith

Auto industry likely to inflect downward from here

Short
NASDAQ:CARZ   First Trust S-Network Future Vehicles & Technology ETF
Manufacturing has been a red-hot sector lately, and the CARZ auto ETF has been a beneficiary of that boom. The latest manufacturing data out today show continued outperformance by this sector, which I suppose is why CARZ is up today:

Empire State index: 17
Price of imported industrial supplies: +3.6%
Manufacturing output: +1%

When you drill into the data, however, it doesn't look as good for automakers. While overall manufacturing output is up 1%, output for auto manufacturers was down 3.7% in August. Another relevant data point from the August CPI report is that the price of used cars rose 5.4% in August. So it looks like the growing number of permanently unemployed workers, now deprived of stimulus checks and unemployment benefits, are starting to tighten their belts and reduce large expenditures. August credit card spend deteriorated in August, -13% YoY vs -12.3% the previous month. Consumer lending has tightened up as well, with banks opting to buy bonds rather than make loans.
Comment: So far, it's looking like I pretty much called the top, here.

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