Thread by @AnalystDC

🚗🚗🚗 ARE GLOBAL CAR SALES REALLY BULLISH? 🚗🚗🚗

Once again, Bloomberg gives us a mental gymnastics clinic in their urge to twist any data series into a bullish headline. This time, it's global auto sales. But is the data really bullish? Let's see for ourselves!

At first glance, what they are saying is objectively true. Looking at auto sales in the US + EU + China, August 2020 was indeed the best August on record so far. But does a single month make a bullish trend? Let's take some deeper cuts at the data!

First, auto sales data is highly seasonal, so let's smooth it by summing over the trailing 12 months. Immediately, we see that something else is at play here. Sales peaked in Sept 2018 (coincidentally, right around when yield curves started inverting and macro turned bearish).

Now, lets take a closer look at the Trailing 12 Months figure as a year-on-year change. The same problems are evident here. Outside of the 2008-2009 period (which was DEFINITELY not bullish for the auto industry), 2019-present is as bad as this data series gets!

Now, to get some context of relative to prior years, let's look at a year-to-date chart. There is some improvement relative to April/May, but we haven't even caught up to 2014 yet! Barring a miracle in Q4, we'll probably end up around 2014 levels (nowhere close to even 2019)

Assuming we end up somewhere in the middle between 2014 & 2015 (I split the difference in my forecast of 57.2M total cars sold), the chart hardly looks bullish. 2019 was already not a great year, and the 2020 forecast is 9.8% below that. Yikes!

If this "2014-2015 level" forecast is even remotely accurate, 2020 will be the worst single year drop in auto sales since the series began in 2000 AND the first back-to-back drop in consecutive years. Even the optimist in me struggles to see anything bullish in these numbers.

In conclusion, when looking at noisy and seasonal data, calling a trend because 1 month happened to be a record is a sure way to look foolish (especially in a year when normal seasonality is disrupted). Besides that, hoped you enjoyed the data and chance to clown on BBG! Cheers!