U.S. retail sales surprised to the downside in November, growing by only 0.2% and indicating a slow start to the holiday season. Could this spell trouble when consumer spending accounts for over 70% of GDP growth? And while the S&P 500 went on a record-setting spree in 2019 and seems determined to close out the decade on a high, the Communications Services and Energy sectors haven’t quite followed suit. They’ve both enjoyed gains year-to-date but it’s been years since they’ve done any record setting of their own. Meanwhile, the CBOE SKEW index continues to climb this week as investors look to be growing nervous about tail risk and outlier returns. Will you have downside protection in place when a left-tail event hits?
1. Has the U.S. economy become too dependent on the consumer?
![Consumer spending gdp contribution](https://blog.investbcm.com/hubfs/12.16%20chart%2010.png)
Source: Oxford Economics & Haver Analytics, from 12/16/19
2. While the S&P 500 marches on to seemingly endless new highs, several sectors are not participating:
![S&P 500 communications services sector](https://blog.investbcm.com/hs-fs/hubfs/12.16%20chart%205.png?width=679&name=12.16%20chart%205.png)
Source: The Chart Store, from 12/15/19
3. The energy sector has not hit a new high in ~6.5 years!
![S&P 500 energy sector](https://blog.investbcm.com/hs-fs/hubfs/12.16%20chart%204.png?width=673&name=12.16%20chart%204.png)
Source: The Chart Store, from 12/15/19
4. Similar to the transports…
![dow jones transportation](https://blog.investbcm.com/hs-fs/hubfs/12.16%20chart%203.png?width=669&name=12.16%20chart%203.png)
Source: The Chart Store, from 12/15/19
5. Mid-caps are getting close…
![S&P 400 midcap](https://blog.investbcm.com/hs-fs/hubfs/12.16%20chart%202.png?width=664&name=12.16%20chart%202.png)
Source: The Chart Store, from 12/15/19
6. Yet Small Caps still have some work to do to catch up…
![S&P 600 small-cap](https://blog.investbcm.com/hs-fs/hubfs/12.16%20chart%201.png?width=663&name=12.16%20chart%201.png)
Source: The Chart Store, from 12/15/19
7. The SKEW Index is elevated indicating a tail event is more likely…
![cboe skew index](https://blog.investbcm.com/hs-fs/hubfs/12.16%20chart%207.png?width=653&name=12.16%20chart%207.png)
Source: WSJ Daily Shot, from 12/16/19
8. What causes the most light pollution at night? Put another way, what are the bright spots?
![u.s. light pollution](https://blog.investbcm.com/hubfs/12.16%20chart%209.png)
Source: WSJ Daily Shot, from 12/16/19
9. Cities? Nope! It is the flaring off of excess gas in the shale oil fields:
![light pollution sources](https://blog.investbcm.com/hubfs/12.16%20chart%208.png)
Source: WSJ Daily Shot, from 12/16/19
10. You are not alone!
![holiday shopping attitudes](https://blog.investbcm.com/hs-fs/hubfs/12.16%20chart%206.png?width=629&name=12.16%20chart%206.png)
Source: Statista, from 12/11/19