Here Is The Flashing Red Light In The Inventory-Sales Ratio

Recession watchers stay tuned... Wholesale Sales rose a mere 0.3% MoM (missing expectations of a 0.9% rise) but sales tumbled 3.4% YoY - the most since the financial crisis. Hopers will look at the rise in inventories (+0.8% MoM vs +0.3% exp.) as GDP positive but at some point the hope for a sales pick up fades and inventory stuffing stops (Sales -3.4% YoY, Inventories +5.0% YoY). But what should be worrying everyone right now is the inventory-to-sales ratio holding at recession levels.

 

Big miss in MoM sales and biggest drop in YoY sales since the financial crisis...

 

and along with a surge in inventories, leaves the critical inventory-to-sales ratio flashing red...

 

And guess where inventrories are soaring the most...

 

Here's why this matters so much, as we explained previously...

 

Despite 22 years of correlations (and obvious causations), asset-gatherers and commission-takers still think this time is different and channel-stuffing and 'if we build it, they will come' inventory overbuilds will be bought away in a swarm of freshfaced crappy creditworthiness consumers... not this time - as peak debt is now upon us.

 

Charts: Bloomberg