Reading through here, it really appears everyone is missing one key metric while keeping eyes on the other more obvious one.
3rd time I’m saying it:
DEMAND DESTRUCTION!!
Here’s some credibility on the macro, this was timed excellently looking back 2 years ago:
RN, CEOs are not making CapEx decisions, the economy is slowing, and consumer confidence is shrinking. I’m of the opinion at the dealer level, these aren’t the brightest economists (there are outliers, so that’s more of a generalization). I believe they think they’re about to squeeze consumers, but as I said earlier, the ingredients of this and ingredients of Covid are much different. Shortage of goods and a nuclear bomb of money supply, that is very different to today. Idk if it’s my base case, but it’s getting higher specifically to cars that they will pile up with price increases. A slowing economy, a consumer near tapped out, and confidence in the gutter. This is far from an environment where people will spend more. As they try to pass price increases on, more and more cars will sit on lots. The end result might sound good with this prognostication, but it’s actually very bad as the economy will roll over. I’m not fully there yet, but the more they FA with policies like this, my worry is the more we’ll FO.
Tried to keep this economic outlook as specific to the auto market as possible, so hopefully I kept it clean enough.
ETA: I’m viewing the 5,500 level as very important to hold on the S&P 500. If the market rolls over, everything including the auto market will roll with it.