'MOMENTUM’ INVESTORS BUY STOCKS EVEN THOUGH GOLD AND BONDS ARE WARNING THEM $SPY $GLD $T $VZ $DUST $NUGT $GDX $SLV $UUD $UUP $QQQ $IWM

Sophisticated investors closely follow economic data. But I’ve noticed that some lesser-experienced investors don’t do the same. They should. Because two important pieces of economic data were just released.

Retail sales

Please click here to see a chart of retail sales. Please note from the chart that as the stock market continues to go higher, retail sales are declining after a prolonged run. This is especially troubling because the economy is near full employment. Typically, as employment gets stronger, retail sales climb. Could this be an early warning signal?

The American economy is 70% based on consumer spending. For this reason, retail sales are very important.

Retail sales, excluding autos, came in at -0.2% vs. +0.2% consensus month-over-month. We exclude autos from our models because they’re volatile and create noise that clouds the analysis. To see how The Arora Report filters out the noise, please click here.

Ask Arora: Nigam Arora answers your questions about investing in stocks, ETFs, bonds, gold and silver, oil and currencies. Have a question? Send it to Nigam Arora.

Inflation data

The core Consumer Price Index (CPI) came at 0.1% vs. 0.2% consensus. In our models, we do not use headline CPI and exclude food and energy because they, too, are volatile.

Weak inflation sometimes takes pricing power away from companies. This often leads to less profitability…Read more at MarketWatch

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