6 replies to this topic

[Tor]

Consumer is weakneing, so avoiding this part of the economy. is risky, but market continues to rise!!! Stay with the trend!!! Good morning. Today’s topic is the American consumer; 70% of US GDP, 20% of global GDP, the one part of the American economy that has yet to slow and the wildcard in the outlook. The widespread consensus from Friday’s U of M consumer sentiment index was that it was bullish because it beat market expectations. But in reality, the headline print of 88.7 in May is actually lower today than it was at the onset of the last recession in March 2001 as well as being right in line with the reading that prevailed at the opening month of recession in July 1990. And what was clear in the sentiment report was that the stock market run-up isn’t doing much to boost consumer spending plans because the homebuying index fell to a three-month low in May and auto buying plans sagged to a nine-month low. So to have confidence this soft at a time when the equity market is breaking out to the upside is a rare event, and what it tells us is that there are other obstacles out there that risk slowing the consumer down materially in the next few months. First, retail gasoline prices have broken to $3.13/gallon for the first time in history, and are up a record 43% just in the past four months. But it’s not all just about gasoline – the food bill is also rising rapidly with the CPI food index up almost 4% year-on-year and a 6% annual rate over the past three months. Food and energy together have drained 3 percentage points out of headline retail sales growth since January which was the peak this year for consumer spending growth; and the grim reality is that the recent acceleration in food and gasoline prices is unlikely to subside anytime soon. Food prices at the producer level are running at an 8% year-to-year trend; and the 15% pace over the past three months shows which shows just how quickly farm prices are moving into the producer level, and this is sure to filter through more forcefully into retail prices.

[Mr Dev]

How does one figure that the NAS is beginning to lead?

The NDX just went thru about 15-18 days of consolidation and just breaks out today?

Meanwhile the DOW has been leading and has made new highs today and the day before,

and the day

before that
and the day before that,

and the day before that

and the day before that,

and the day before that,

and consolidated for only about 3 days back then but also made NEW high to lead

....the day before,

and the day before that

....oh boy ...and so on.

I hope everyone gets it, ....but pleas explain your logic.

[PorkLoin]

The NASDAQ may be getting into "leading" gear but it'd be quite a change. Obviously, August into November had it in the lead, but since then - despite periodic pops - it's been a lagger. Who knows? Maybe six months has given it enough rest....?


Doug

[thespookyone]

I wouldn't thank Ben, just yet. I think one of the biggest things that propel the coming correction is the final realization that Ben is not about to grant any interest rate cut favors. As far as the Nasdaq leading, visa vie the Dow-the Naz has roughly 2600 points to catch up here, to go back to old highs, like the Dow. You might say it has lagged "just a bit" since 2000,eh? Sure, it could "be different this time"-but I never put my money there. The Naz is a nice follower, however-as the Dow weakened, the Q's thought it wise to give up 50% of their gains into the close Spooky

[Tor]

I wouldn't thank Ben, just yet. I think one of the biggest things that propel the coming correction is the final realization that Ben is not about to grant any interest rate cut favors. As far as the Nasdaq leading, visa vie the Dow-the Naz has roughly 2600 points to catch up here, to go back to old highs, like the Dow. You might say it has lagged "just a bit" since 2000,eh? Sure, it could "be different this time"-but I never put my money there. The Naz is a nice follower, however-as the Dow weakened, the Q's thought it wise to give up 50% of their gains into the close

Spooky

Looks like rotation to me. Dow down, NAS up. Makes sense, given the run up we've had DOW.

[Mr Dev]

Looks like rotation to me. Dow down, NAS up. Makes sense, given the run up we've had DOW.

Glad to hear the markets make sense to you,...not many pros,.. even on Da FLoor can make sense of it.

[Tor]

Looks like rotation to me. Dow down, NAS up. Makes sense, given the run up we've had DOW.

Glad to hear the markets make sense to you,...not many pros,.. even on Da FLoor can make sense of it.

Tightening stops now. Will see if to by the dip or to stand aside.