Q1 GDP, US Gasoline Usage, Retail Trader Flows

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Q1 GDP, US Gasoline Usage, Retail Trader Flows

Three “Data” items today:

Topic #1: The latest Atlanta Fed GDPNow estimate for Q1 2022 is out. We prefer this algorithmic model to human economists for 2 reasons. First, it tends to be more accurate. Second, the Atlanta Fed routinely provides updates based on the model’s readings of the latest data. It is as close to a real-time GDP run rate analysis as one could hope for.

The chart below shows that GDPNow sees the US economy growing by 1.3 percent in Q1. While not especially strong, that’s still better than the negative readings of a few weeks ago. The latest uptick in the estimate came from economic reports tied to the consumer (retail sales, housing starts) and businesses (export/import prices, industrial production).

Takeaway: while neither GDPNow nor economists (including those at the Fed) are expecting much from the US economy in Q1, it is still the springboard from which the rest of the year will progress. So far, things look good enough to believe Q2 and beyond will be better.

Topic #2: US gasoline usage. Three data points to consider:

  • Gasoline prices are up 51 percent from a year ago, to an average of $4.32/gallon (source: US Energy Information Administration).
  • Also according to the EIA, US gasoline consumption is up 6.0 percent over last year, to 8.9 million barrels/day for the week ending March 11th. Demand that week was 2.3 percent higher than 2 weeks prior (8.7 million barrels/day).
  • Over the last 4 weeks, average weekly US gasoline consumption is up 8.6 percent versus the prior year, to 8.8 million barrels/day.

Takeaway: higher oil and gasoline prices are certainly crimping consumer pocketbooks, but they are not yet causing a decline in demand. Given more workers commuting back to the office and incremental employment, we expect demand to continue to improve as the year continues. It always amazes us that the US uses the better part of 10 million barrels/day of gasoline…

Topic #3: What do US retail investors do on the third day of a strong rally for stocks? Data from Fidelity’s website shows they selectively sell or keep a fairly balanced order book. Here are the buy/sell order ratios as of today’s close for popular names:

  • Tesla: 1.4x more Sell than Buy orders
  • AMD: 1.5x more Buys than Sells
  • TQQQ: 1.1 more Sells than Buys
  • NVIDIA: 1.1x more Sells than Buys
  • Apple: 1.2x more Buys than Sells
  • SPY: 1.1x more Buys than Sells
  • Nio: 1.3x more Buys than Sells
  • Alibaba: 1.0x ratio (equal Buys and Sells)

Takeaway: there is much more balance between Buys and Sells on this list than when the market is selling off steeply. In those cases, Buys can outnumber Sells 2 or even 3:1. We don’t know how many retail traders make money consistently, but in the aggregate they do seem to be reasonably adept buyers on dips. And, when markets rebound, they don’t chase names on a third straight up day. All that speaks to some basic level of risk management. Retail may not be the ”smart money”, but from everything we’ve seen this year they aren’t the dumbest money either.

Sources:

EIA Data: https://www.eia.gov/petroleum/weekly/gasoline.php

Atlanta Fed GDPNow: https://www.atlantafed.org/cqer/research/gdpnow