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Meaningful Statistics

March 29, 2010 – 10:08 am

The market took a decidedly bullish turn this morning when the February Personal Income and Consumptions reports were released. It wasn’t that either report was strong rather it was the fact that while income was stable, spending actually rose thus consumers saved less. Since consumer spending is 70% of our economy it appears that they have decided to open their wallets just a little more and that gives the stock market feelings of hope. Are consumers coming back after being very reluctant to spend for well over a year?

Also, these two reports indicate that inflation, year over year, is only at 1.3%. Unlike the CPI and PPI reports we had last week the Personal Consumption Expenditures part of the reports out this morning exclude food and energy. This is an effort to gauge underlying inflationary pressures and there is none to see. Of course you and I can’t exclude food and energy from our costs thus we see inflation many times when the government does not.

So these two reports provided a reason for the market to move up. Over the last two trading days the market was up in the morning only to give it all back by the end of the day. It would be nice to see it hold up this time. The investors and traders are having a hard time breaking through the 11,000 barrier on the DOW. It will be broken, but it would be nice for it to happen sooner than later.

Finally, the jobs report for February comes out on Friday, Good Friday before the Easter break. Let’s hope it is a good Friday for jobs.

Good Trading
Steve Peasley

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