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Will it Work?

September 28, 2012 – 5:35 pm

This morning’s economic numbers were about spending. The consumer spent 5% more in August which was the second month in a row of strong growth. The problem was that it was almost all because of higher gasoline prices. Without that consumer spending rose only .1%.

It is the consumer that we must watch. Recently, oil prices began to fall so gas prices will slowly trickle down as well but will the consumer keep spending as we enter the fall season with the holidays around the corner? If he/she does then stock prices will likely hold up and advance further.

The background economic landscape both here in the U.S. and abroad is delicate. Slowing growth is being counteracted with more aggressive steps by central bankers around the world except maybe in Europe. There is an old saying, ‘don’t fight the Fed’. In this case don’t fight all the Feds in Asia, South American, Australia and Canada. Their efforts should stimulate growth. The question will be at what cost.

Most feel the cost will be in future inflation, but that is for another day to worry about.

Good Trading
Steve Peasley

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