|
 Forrest, who works for the Pittsburgh-based Fort Pitt Capital Group,
believes participation in dog shows is as middle class as it gets
and as such is a great economic gauge.
“This is the very definition of disposable income."
Forrest is not alone in using an offbeat indicator. Several analysts
and investors look at unusual data, hoping it will help them spot
economic trends sooner or understand them better than those who rely
on conventional fare.
"Many market strategists cling to the Fed minutes and other standard
information," says Nick Colas, chief market strategist at the
ConvergEx Group in New York. "If I want to be competitive I need
something different."
Colas tracks gun permit background checks, food stamps and frequency
of Google searches. Others analyze TV commercials for wedding
packages, shopping mall traffic or garbage volumes. They all say
unconventional indicators are especially useful at a time like this
when standard data keep sending mixed signals.
For example, in the past few weeks, jobless claims hit a 15-year
low, but gross domestic product data showed a marked slowdown in
U.S. growth.
And what do the quirky data show?
Essentially a still somewhat tenuous U.S. recovery nearly six years
after the end of the Great Recession.
Colas for example, notes that gun permit background checks have been
rising, which he considers a good sign. He acknowledges there could
be many factors affecting firearm sales, but reckons the willingness
to spend hundreds of dollars on guns does work as a measure of
spending power.
On the other hand, food stamp usage Colas also monitors has held
steady, while the frequency of Google searches of the term "food
stamp" has been on the rise.
"The bottom line is we are in a tepid recovery."
Forrest also saw a reason for concern when she took part in a dog
show in western Pennsylvania last month and found that the number of
entrants has been slipping.
"This really told me that things were not okay."
She believes regional shows she attends across the country are a
better gauge than nationwide data which have held steady, but are
skewed by big, high-profile events attended by professional
breeders.
It's not all gloom, though.
WEDDINGS AND MALLS
Bill Smead, chief investment officer of Seattle-based Smead Capital
Management, for example, was encouraged by the frequency of
Southwest Airlines <LUV.N> TV ads promoting low fares for the
upcoming wedding season.
“Weddings are usually followed by buying houses, having babies and
buying cars that fit car seats,” he says. “That is the driver of the
U.S. economy.”
[to top of second column] |
Smead acknowledges that it could take years before the newlyweds
decide to have offspring, but says his investment philosophy is
about being patient, sometimes contrarian, and looking years ahead,
often with the help of non-standard indicators.
Peter Kenny, chief market strategist at New York-based trading firm
Clearpool Group, also sees positive signs emerging from his
research.
Once every four to six weeks he heads to a shopping mall to check
how busy it is and how high-end retailers such as Apple <AAPL.O> or
women's clothing chain Madewell are doing and notes that the traffic
clearly picked up last month.
Tracking dog shows sounds more fun than poring over non-farm payroll
data, but does it work?
Tim Duy, economics professor at the University of Oregon, says
offbeat indicators can help investors crystallize their views, but
they need to be careful with their interpretation.
"The challenge of these indicators is to separate out the movements
attributable to non-economic factors," says Duy. For example,
firearm sales could rise in anticipation of tougher gun laws, he
says.
Analysts and investors say that while it is not a precise science,
going off the beaten track is well worth the effort.
Colas, for example, says food stamp use has been a reliable proxy of
the U.S. economy's strength and has helped form his view that the
Fed would be patient about raising interest rates.
Kenny says his trips to the malls chimed with the first quarter
gross domestic product data that showed a slow economic recovery and
now expects new data to confirm the pick up he has seen over the
past few weeks.
And Duy himself, who collects monthly landfill data for Oregon
because he believes the economy produces more waste when it is
growing, says over the years the figures have consistently squared
with the findings of the more traditional indicators.
(Editing by Tomasz Janowski)[© 2015 Thomson Reuters. All rights
reserved.] Copyright 2015 Reuters. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed. |
