Why The Dow Is In For A Beating Thursday....
The U.S relies on credit for the lifeblood of economic prosperity. This credit was financed through foreign debt and easy money. I hate to be the bearer of bad news but that fairy tail land, which did last an entire decade is over. Back to the Point..... Oh yes I'm predciting a lashing tommorow on all major benchmarks and potetially the end of this bear market rally. (Althoug market timining is crazy to begin with). RETAIL SALES ARE ANNOUCED TOMMOROW!
1) Unemployment continues to increase, causing most people to cut back to the bare essentials. Unemployment figures ignore those who have been forced to take part time jobs. Housing Prices have fallen significantly and still is in certain part of the country.People feel poorer when their house declines in value. This is in turn causes retailers to cut prices in hopes they can salvage some profit from each sale (even though margins are razor thin).
2) People do recognize long term rates are creeping up, which should make most even more certain of the future. On that note, uncertainty continues to grow as seen through a large % increase in the savings rate.
3) Oil, but more notably gasoline prices have been increasing in the face of rising unemployment, taking that much more from which people to consume with. Additionally, due to the $150 barrel of oil seen last, people may be saving for that outcome.
4) High end products, expensive cars , vacations and things of that nature have not picked up and most likely worsened.
In other words, the venerable consumer who which we have identified with for as long as we can remember is gone and I personally bought at the money puts a few months out as evenif they manage to dodge tommorows numbers, it is unlikely to last through the summer. Lets see Financials, Retail, an accelerating decline in indutrial production and widespread uncertainty will sooner or later make this dead cat stop bouncing, and it could be tommorow. Just some food for thought...