consumer spending and consumer income

Stock market News – Consumer spending has outpaced consumer incomes

Sunday, 6 March 2011

with all this madness pouring out from the Middle East, volatility in the market will remain uncertain until it squares off there problems. so Stock uncertainty and fear will continue to be front news, as we head on next week.
Not all is bad, very decent job reports came out this week; rising over 220 thousand in the private sector and unemployment drop to 8.9 percent all of this represents pretty good progress on the job front and added to the very strong figures of the ISM this week, there is no economic train wreck out there. however wages were flat in February even if gas prices sky rocketed and this brought the fear in the market on weaker consumer spending.

There’s an awful lot of chaos out there, and even if oil has gone crazy we only had about a 2 % correction in stocks, there is some underlying strength that is holding the market, a value that is supporting the pressure of the rages going on the Middle East. however,more we move on, more the consumer is going to feel the squeeze not only at the gas station, but every where.
commodities are rising, and ramped money printing, not only in the United States, but in Europe, japan and elsewhere. This cannot be absorb by the consumer, they are already over indebted, consumer spending has outpaced consumer incomes, therefor things are not getting healthier on the consumer front, in the mean time corporate profits are going to take a hit from higher input cost, so it is an absolute concern moving forward.
be prepared for the eventuality of a 10 to 20 percent correction in the stock market if the barrel continue to move up and the Saudi start to get nervous. your portfolio should reflect some of these themes, coffee, fertilizer, Caterpillar, short the dollar, short the Treasury, and keep a lot of cash.
the middle east situation is draining this market, and until God knows when it gets resolve, you should try to keeping cash and invest only if you are sure.

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