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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory

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To: Jim Willie CB who wrote (457)	8/23/2003 8:52:46 AM
From: russwinter	Read Replies (2) of 110194

BCA chart (ex auto and gas)showing prior retail sales spikes. bcaresearch.com Correlations (to unsustainable retail spikes) are rather easy to spot: a one quarter lag to the mortgage application refi index. A refi index chart (unfortunately without date reference points) can be found near the end of Contrary Investor's August issue. contraryinvestor.com The BCA May 12 chart is no longer on line, although I have a paper copy to reference. The late 2001 retail "shop til you drop" super-XMAS (12% gain)was financed by a corresponding monster spike from 2000-6000 in the index. Retail sales collapsed in 1H/02 along with the drop to under 2000 on the index. Looks like the heroin addict needed a bigger dose in the late 2002 refi boom, which took the refi index back over 7000, but only good for a 5% retail pop. The retreat in late 2002 back under 4000 took retail sales back to flat line. The mother of all refis in the first half of 03 (over 9000!), put enough credit in folk's pockets to engender the current 8% retail spike. Big tax rebates (and corresponding federal deficits) helped the addict get a good temporary spike high this time. Unfortunately for retailers, the Labor Day period might be about it (that is if consumers can afford to gas their cars for a trip to the mallshttp://www.marketwatch.com/news/yhoo/story.asp?source=blq/yhoo&siteid=yhoo&dist=yhoo&guid=%7B42714550%2D76B8%2D4612%2D8B05%2D4EAA93175CEF%7D), as the refi index is now in free fall to 2757. Game over, and all that new debt still has to be serviced. XMAS looks dicey.

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