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Auto Sales, the Consumer and the Economy

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  • Description

    First Trust Advisors senior vice president Ryan Issakainen weighs in on August auto sales.

  • Duration 3:12
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-- -- auto sales numbers are out of the three major US auto -- all posting double digit sales gains for August.

Joining us today with more on what this means for the economy also for -- stocks.

Brian -- -- -- and first trust senior vice president thank you so much for joining us.

-- right to it there were the numbers -- you know pretty impressed you look at Ford up 13% GM 10% Chrysler 14%.

And what strikes me is is it just the comparison that it was an easy comp year over year why is GM the -- Over.

Yeah I think it partly is because of the comparison I think -- more important fundamental reasons that we're seeing.

Are really this improved trend because it isn't just this month worries seen outperformance or or beating expectations it's really been since last summer.

And a lot of that has to do with the fact that consumers are less leverage than they have been since 1993.

There's a lot of room to increase spending.

There was all that pent up demand because people put off buying autos.

During the credit crisis and banks are more willing to -- -- -- They.

And newer vehicles get better gas mileage so.

I have more to yeah.

Wonder how this is possible -- because we were just talking about are Americans better off you look at the median net worth has fallen by like 40%.

Income has fallen wages have fallen so how is it possible that people have both the confidence and the money to go up by new car.

Yet.

It's it's surprising -- this summer I mean unemployment is still over 8%.

And yet disposable income as a percentage of -- or household obligations as a percentage of disposable income if you look at the statistics it's just over 16%.

And that's the best since 1993 so.

Absolutely -- -- seen stronger growth had some of these other -- if the economy had been firing on all cylinders no pun intended.

But.

Surprisingly enough the auto industry is recovering here and you have you know -- in China there's also some fears about weakness in the economy.

And you know China last month had a 7% year over year gain in their auto sales.

Super -- and Arabic you -- to pick the strongest player out there somebody was looking to invest I mean.

Chrysler was up the most are -- would you go for GM which -- has the most room to move higher -- -- -- like in the -- in -- avoid.

Yet now I believe that the best way to get exposure to the auto industries through the more diversified approach and we offer.

And ETF that buys about 35 companies in the auto sector and that way.

-- not getting the stock specific risk that that includes you know if there's a supply chain disruption for an individual company.

If you've got some sort of other individual company issue there's a lot of risk there.

I think most investors that believe that.

You know this might be an opportune time to invest in auto stocks are better served and diversified approach like -- TF -- air symbol is CA RZ.

It and in auto stocks are all pretty cheap Melissa.

The average PE in our portfolios about eleven and a half times earnings and a lot of times stocks are cheap for a reason Ryan thanks for joining us we appreciate your insight.

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