UNCOMMON INDICATORS - SAME RESULTS

I found an interesting video on CNBC (yes, all fluff and they try to make all things positive).  The CNBC gang interviews Nick Colas who tracks internet searches on Google to attempt to find trends that might indicate where companies and the economy are going.

Clearly everything in the economy is not roses as he responded several times, "that's a tough one" meaning that because the search term was showing up more and more that didn't mean that things were getting better.  Essentially this interview highlights one of my issues with the CNBC hosts, they enter into the interview with the thought that these indicators are to reveal bullish information, hence the panelist is in a position to defend the data and almost apologize if the data is negative.  Truthfully, it isn't hard to figure it out, you just examine the results, question it, and then accept it.




Here are the search trends he follows;

GOOGLE SEARCHES FOR HOME BUYING - I get this one, I hadn't thought about that.  I would state though that I'm hearing more and more complaints from realtors and mortgage lenders that they can't get buyers that can get financing.  In my city this is really blowing up potential deals and causing slow sales. 

SEARCHES FOR USED CARS  - He doesn't share with us the numbers for used cars, but this would be useful to see if folks are going to try to buy new cars or buying used.  I keep hearing lots of optimism from the auto industry about their growth prospects and how things have changed.  I wanted to examine these indicators for myself and so I used the Google Automotive Search Index results as a high level "smell" test.  Interestingly the index values show a couple of striking things.  First, we are currently at a level that is much higher than last year, which was horrible.  This is wonderful and you can see how the executives at the manufacturers are excited that things are looking up.  Despite the good news, we see that this is also a level that is similar to 2007, which wasn't exactly awesome.  On top of that you must account for a growing number of searches as people are using media and search more, much more than they did 4 years ago, so this too should make us pause a little.  Finally, we have just exited the typical peak point in sales and searches in terms of seasonality.  Last week I posted a chart on GM, I'm not getting long anytime soon. - GM CHART FROM 7/22/11.  Take a look at the Google Search Index for Autos below.

SEARCHES FOR GUNS -
I'm not exactly sure that guns are a great indicator of improving financial health as Nick tried to spin this.  His angle is that guns are a $300 to $500 durable good like a washing machine or refrigerator.  Somehow I'm not thinking that gun searches are a marker that citizens feel confidence in an improving economy.  I believe that folks feel like the system is breaking down and the government cannot protect them.  Perhaps folks aren't looking to prepare for Mad Max times, but their search for the best gun for them may mean that they are concerned about the increasing risk of break-ins and their security.  Oh yes, if you are in the market for guns you might consider the Mossberg 500 or 590 and the Glock 23 as a starting point in your research.

SILVER AND GOLD -
We've discussed this at great length, people across the world are buying gold and silver as the un-currency and as an inflation hedge.  If "investors" are looking to buy gold and silver, they don't have a lot of confidence in traditional investments. 


FOOD STAMPS -
The Goatmug Blog tracks food stamp usage every month, but I like the idea of watching these trends to see how many searches are being performed in real time. This approach may give us insight into what numbers will look like several months in advance.  Regular readers know that we report these dismal figures in the monthly update and last month's figures show that almost 45 million people are on the roles and as the panelist described one in five families receive food stamps.  How disgusting!

GOOGLE TRENDS

If you have a desire to check out some of these you can look at Google Trends to examine word searches and also you can use this link in Google Finance - http://www.google.com/finance?q=GOOGLEINDEX_US:AUTO

I did searches for durable goods and other items and many of the results show how poor the us consumer is right now in terms of discretionary spending.  Durable goods searches are at 7 years lows, but it is beginning to tick up compared to last year's horrible totals in year over year trend!  Wow! 

At the end of the day I like this approach it may give us a view of coming changes in trend in a real time format.  At least Google's spying is good for something right?

GOATMUG

 

Goatmug is an investor that cares about you and your family. Goatmug's Blog - Financial Perspectives From The Mountain Top is a collection of thoughts on our economy and how it impacts the lives of investors and average people. While several specific investments are named in many of his posts, these articles are simply invitations for you to do your own research and reference to these securities does not constitute financial advice. Your situation is complex and unique and you should seek professional assistance with your trading and investing. Please visit Goatmug and share your comments at http://www.goatmug.blogspot.com/