No6's Financial Markets Thread

[No6]

Mark Mobius sees commodity stocks having a long way to go, but maybe he will wait for the China fallout, if any, this week before buying further.

 

"We could have an optimistic scenario for quite some time," Mobius, who oversees about $34 billion, said in a telephone interview from Beijing yesterday. "Commodities are the big area for us. We are great believers in higher commodity prices and therefore are investing in commodity companies."

 

==============

 

China Bull

 

The MSCI Emerging Markets Index has jumped 17 percent this year, compared with an 8.4 percent advance for a measure of developed markets.

 

Mobius said he's "very bullish" on China as the country has "no big problems." Even though stock valuations are not as attractive as last year they are "not out of sight" and Templeton funds are buying companies that are expanding in the nation's less developed regions, particularly consumer companies.

 

http://www.thedailycrux.com/content/6194/Guru/rss

[littledavesab]

I had to confront my bearish demons 2009 when I missed the bounce. While I never really got out of the market, I never piled in with cash put to the side at the best moment either. Have accumulated more over the last 2 years however. Not quite sure what that makes me - but probably not nimble!

 

Anyway, suffice to say, I too have cut back on the amount of bearishness I read and tend to lean more towards those who go with a muddle through after period of pain kind of outcome.

 

I guess it is an obvious point that the more short term ones trades then the more important it is to get it right and the more difficult that is. So for me I am sticking with the long swings for now (I hope)

 

Do like Alister Heath's commentry from CityAM, he is a muddle through type of guy who did see the crash coming - is a reminder that not all those who foresaw the crash forecast doom and gloom from here (although you might not get that from his commentry on Eire ..

 

His piece of 8Nov reminds us of 4 ticking time bombs which I guess is a good point

 

http://www.cityam.com/news-and-analysis/al...king-time-bombs

 

1. what would happen were another top financial institution to fail. Would it be bailed out – or would a proper, rational procedure be put into place to wipe out shareholders, hit bondholders and wind the firm down, as the Dodd-Frank financial reform bill is meant to ensure?

 

2. possibility that one or several of the weaker Eurozone member states might fail

 

3/4 prospect of a trade war and of increased capital controls all over the world, with the G20 summit in Seoul set to be marred by a row over QE2 and the weak greenback. Last but not least, flawed monetary policies are fuelling fresh bubbles in bonds, gold and commodities. At some point – perhaps in a few years’ time – these will burst

 

Also like the loz n belly podcast by some UK hedge fund managers which is also less bearish than most on GEI.

[No6]

I had to confront my bearish demons 2009 when I missed the bounce. While I never really got out of the market, I never piled in with cash put to the side at the best moment either. Have accumulated more over the last 2 years however. Not quite sure what that makes me - but probably not nimble!

 

Anyway, suffice to say, I too have cut back on the amount of bearishness I read and tend to lean more towards those who go with a muddle through after period of pain kind of outcome.

 

I guess it is an obvious point that the more short term ones trades then the more important it is to get it right and the more difficult that is. So for me I am sticking with the long swings for now (I hope)

 

From a charting standpoint you are are probably better off concentrating on the daily to weekly charts for swing/position trading. These longer timeframe setups can be quite good for trend and momentum following.

 

 

[lupercal]

I had to confront my bearish demons 2009 when I missed the bounce. While I never really got out of the market, I never piled in with cash put to the side at the best moment either. Have accumulated more over the last 2 years however. Not quite sure what that makes me - but probably not nimble!

 

Anyway, suffice to say, I too have cut back on the amount of bearishness I read and tend to lean more towards those who go with a muddle through after period of pain kind of outcome.

 

I guess it is an obvious point that the more short term ones trades then the more important it is to get it right and the more difficult that is. So for me I am sticking with the long swings for now (I hope)

 

Do like Alister Heath's commentry from CityAM, he is a muddle through type of guy who did see the crash coming - is a reminder that not all those who foresaw the crash forecast doom and gloom from here (although you might not get that from his commentry on Eire ..

 

His piece of 8Nov reminds us of 4 ticking time bombs which I guess is a good point

 

http://www.cityam.com/news-and-analysis/al...king-time-bombs

 

1. what would happen were another top financial institution to fail. Would it be bailed out – or would a proper, rational procedure be put into place to wipe out shareholders, hit bondholders and wind the firm down, as the Dodd-Frank financial reform bill is meant to ensure?

 

2. possibility that one or several of the weaker Eurozone member states might fail

 

3/4 prospect of a trade war and of increased capital controls all over the world, with the G20 summit in Seoul set to be marred by a row over QE2 and the weak greenback. Last but not least, flawed monetary policies are fuelling fresh bubbles in bonds, gold and commodities. At some point – perhaps in a few years’ time – these will burst

 

Also like the loz n belly podcast by some UK hedge fund managers which is also less bearish than most on GEI.

 

 

Thanks for posting this. I was begining to question the value of this forum because of the group think bearishness on the economy and bullishness on gold.

 

[No6]

China inflation concerns not hitting market so far. Stock buying as an asset hedge against inflation.

 

What do investors in China do when the government sounds a warning about inflation and the nation’s heady economic growth?

 

Buy, of course.

 

China’s benchmark Shanghai Composite index ended up about 1% Thursday despite a faster-than-expected inflation rate and moves Wednesday to curb bank lending. That’s despite the natural conclusion that China’s central bank could raise rates again to cool the economy. “Concerns about an imminent interest-rate hike will linger on the market for a while, but they may not reverse a mid-term upward trend for the stock market. When people expect inflation rate to rise, a large portion of them will buy some assets, such as shares and gold, to prevent their wealth from depreciating,” said Hong Yuan Securities analyst Tang Yonggang.

 

http://blogs.wsj.com/marketbeat/2010/11/11...inas-investors/

[No6]

I may well post a lttle more on here about the FTSE gold/silver miners as they have been ramping it up in recent months. The likes of Fresnillo and Hochschild Mining have certainly outperformed both gold and silver. HM is up about 6% today so far and is heading towards £6 a share. Difficult to believe that just a few years ago at the height of the credit crunch falls you could have bought this FTSE 250 share for around 65p. Fresnillo, currently around 1440p, could be had for less than a pound back in 2008. These are risky, especially right now as any pullback or reversal in the price of gold and silver will see them fall, but as shares go, especially for a big cap, you would struggle to find better returns over the last year or two.

[No6]

Correction looks underway. We will see how long it lasts. Does not surprise me if we see some of the froth taken off the big movers of the last few weeks over the next week or so.

 

[romans holiday]

I may well post a lttle more on here about the FTSE gold/silver miners as they have been ramping it up in recent months. The likes of Fresnillo and Hochschild Mining have certainly outperformed both gold and silver. HM is up about 6% today so far and is heading towards £6 a share. Difficult to believe that just a few years ago at the height of the credit crunch falls you could have bought this FTSE 250 share for around 65p. Fresnillo, currently around 1440p, could be had for less than a pound back in 2008. These are risky, especially right now as any pullback or reversal in the price of gold and silver will see them fall, but as shares go, especially for a big cap, you would struggle to find better returns over the last year or two.

Will follow with interest. Am looking to put a bit of speculative money to work on this correction. Something like Silvercorp, or GDXJ.

[No6]

Will follow with interest. Am looking to put a bit of speculative money to work on this correction.

 

Even though they are big companies, Fresnillo, Randgold Resources, African Barrick Gold are all FTSE 100, Hochschild Mining and Petropavlovsk, FTSE 250, they are amongst the most volatile in each index and can have large moves either way. However, for anyone bullish on gold and silver these can be used as a more speculative option with less risk than say gold juniors. If you get it right with gold juniors there can be spectacular returns, but the chances of going bust are also high. These larger caps are less likely to go under and are less of a risk, but the ride can still be a rollercoaster, so not really for widows and orphans, etc. Anyway, for anyone who thinks that gold and silver is going to the moon, I fail to see how these companies will not share in the ride, short of a total collapse of the economic and financial system that is. My favorites right now are Fresnillo, Hochshild Mining and Randgold, because they seem to be doing most things right at the moment, whereas ABG and Petropavlovsk seem to have more question marks against them. However, if they put things right they wil play catchup. Worth watching the news on all of these.

 

Petropavlovsk

 

It's not perhaps the biggest surprise in the market, but gold miner Petropavlovsk has cut its full year gold production target again.

 

The company, which operates in Russia and was formerly known as Peter Hambro Mining, said it expected to produce 510,000 to 530,000 ounces of gold in 2010. In August it expected that figure to be 636,000 to 670,000 and before that it was forecasting up to 760,000. The lack of surprise at the new cut comes because the company had previously reported delays in the delivery of major mining equipment such as excavators, and also complained of severe weather as it tried to raise production at its Pioneer site. Chairman Peter Hambro was more positive about the outlook, citing better operational performance to come and more accurate forecasting. Not to mention the still stellar price of gold.

 

http://www.guardian.co.uk/business/marketf...oduction-target

 

LONDON (SHARECAST) - African Barrick Gold’s profit fell 8% during the third quarter and revenue dipped 1% following a decline in production at the Tanzania-focused gold miner.

 

Net income dropped to $40m during the three months to 30 September from $43m a year ago and sales of $209m were lower than the $211m reported in 2009.

 

Profit for the nine months is still up 87% though at $139m and revenue 35% better at $633m.

 

The company, which recently slashed production forecasts at its Buzwagi operation following a huge fuel theft, blamed the quarterly drop in revenue on a 23% slump in production to 164,996 ounces of gold.

 

Today’s numbers would have been worse but for a 29% increase in the average realised gold price to $1,233 an ounce. Output for the nine months was up 4% at 521,204 ounces.

 

Earlier this month, the company suspended 40% of the mining department at Buzwagi following a fuel theft it suspects was an inside job.

 

http://www.sharecast.com/cgi-bin/sharecast...tory_id=3767055

[No6]

How did Naked Trader, Robbie Burns get on at the LSE?

 

I arrived at the LSE. It has a new modern building block which is very nice indeed.

 

It's full of, well I guess the investment bankers of the future. At least that's what the students tell me they want to do.

 

There were about ten students milling about outside the lecture room. So I figured, ok, well it should be nice and quiet and easy.

 

On entering, suddenly about 70 students seem to come from nowhere and fill up the room, some standing at the back.

 

Some I think were just curious, one or two already read the site, and I would say about 7-8 already tried trading.

 

The curious buggered off after ten minutes (about 12) - my talk about psychology obviously wasn't what they were after. Or else they just thought I was some old b****** stuck in the past.

 

The internet connection wasn't working well and I struggled to bring up my spreadbetting accounts live, I like working off those especially to show how to move stops up. At that point I lost some of the audience a bit who of course want any excuse to get texting!

 

Eventually the internet worked better and after the hour was up I suggested those who'd had enough left and those who were interested in trading and wanted to ask questions stayed behind. There was a mass exodus!

 

Well, after all Hollyoaks was about to start on C4 plus one..

 

That was better really as it left me with about 15 who were interested and I stayed another hour because the questions were interesting and I could go into things in more depth.

 

I think those left got the idea that those who were good at online poker were the most likely to be good at online trading - I think one or two will do really well.

 

I guess I found the whole thing a bit stressful in that there was a lot of noise with people going in and out and with the internet not working too well. Also in an hour it really isn't possible to cover what I do.

 

So in the end it crystallised my view that I either do things properly with people over ten to 12 hours or don't do it at all. So don't expect any more one hour talks from me for anyone!

 

Still, it was an experience. And it was interesting to see the bustle and hussle of that area of London.

 

Talking to the students some want to be investment bankers, market makers and the like and I'm not really sure they are totally aware of what it means. Which in the end to my mind is an upmarket bookmaker!

 

Internet poker was definitely rather popular and I guess if these maths brains are good at it it could pay off some student debt....

 

http://www.nakedtrader.co.uk/index.htm

[romans holiday]

Even though they are big companies, Fresnillo, Randgold Resources, African Barrick Gold are all FTSE 100, Hochschild Mining and Petropavlovsk, FTSE 250, they are amongst the most volatile in each index and can have large moves either way. However, for anyone bullish on gold and silver these can be used as a more speculative option with less risk than say gold juniors. If you get it right with gold juniors there can be spectacular returns, but the chances of going bust are also high. These larger caps are less likely to go under and are less of a risk, but the ride can still be a rollercoaster, so not really for widows and orphans, etc. Anyway, for anyone who thinks that gold and silver is going to the moon, I fail to see how these companies will not share in the ride, short of a total collapse of the economic and financial system that is. My favorites right now are Fresnillo, Hochshild Mining and Randgold, because they seem to be doing most things right at the moment, whereas ABG and Petropavlovsk seem to have more question marks against them. However, if they put things right they wil play catchup. Worth watching the news on all of these.

Cheers No6. I'm thinking GDXJ would be good for a speculative punt, but not too speculative as some single junior might be. I reckon speculators will buy this simply because they expect other speculators to do so.

 

A couple of more senior stocks such as the ones you mention would then complement something speculative such as GDXJ, which I'd put less money in.

[No6]

This might bring back memories for some people and the company seems to be in recovery mode despite troubled times.

 

Hornby 'well-placed' for Christmas

 

Hornby is making “encouraging progress” and the toy company that owns the Corgi and Airfix brands says its new Scalextric range is selling like hot cakes in the run up to Christmas.

 

Profit before tax for the six months ended 30 September fell to £528,000 from £743,000 in 2009 as product mix, market mix and the sale of goods bought the year before at less favourable exchange rates pressured operating margins.

 

Turnover was up 2% though at £25.5m, but it could have been more as the group was unable to meet demand due to low inventories and delays to new products.

 

But sales in the UK jumped 12% and the new Scalextric Start range - selling for between £60 and £80 - has exceeded the company’s expectations. “We have high hopes for this range over Christmas,” Hornby said.

 

http://www.digitallook.com/news/3824481/Ho...ername=&ac=

 

[jerpy]

How did Naked Trader, Robbie Burns get on at the LSE?

 

Interesting experience no doubt and shows the mindset of youth!

 

Talking to the students some want to be investment bankers, market makers and the like and I'm not really sure they are totally aware of what it means. Which in the end to my mind is an upmarket bookmaker!

 

Hmm just about sums it up for me.

[No6]

Interesting experience no doubt and shows the mindset of youth!

 

 

 

Hmm just about sums it up for me.

 

Or it could just mean that they are being clever and know where the real money is.

[No6]

The Asian "plunge" not yet being shared in the West.

 

Asian Stocks Plunge on China Rate-Hike Fears

 

At close, China’s Shanghai Composite tumbled 5.2%, Hong Kong’s Hang Seng declined 1.9% while Japan’s Nikkei fell 1.4%. India’s Sensex dropped 2.3% and, across the region, Australia’s ASX lost 0.8%.

 

Chinese shares posted the biggest losses in the Asia-Pacific region as the nation’s inflation rose the fastest in two years in October. Market sentiment was hurt by a lackluster close on Wall Street overnight after networking giant Cisco Systems projected a disappointing sales outlook.

 

http://news.morningstar.com/articlenet/art....aspx?id=359757

 

But for every bit of bad news, the mixed signals of good news, as would be interpreted by the market, is there as well.

 

Consumer Sentiment in U.S. Climbed to Five-Month High

 

Consumer confidence increased in November for the first time in three months, a signal gains in employment and wages are starting to lift Americans’ spirits.

 

The Thomson Reuters/University of Michigan preliminary sentiment index rose to 69.3, in line with the median forecast of economists surveyed by Bloomberg News and the highest level since June, from 67.7 in October. The measure averaged 88.9 in the five years to December 2007, when the last recession began.

 

http://www.bloomberg.com/news/2010-11-12/c...n-november.html

[No6]

Some good and bad news in this as well.

 

Britons' wealth hit five-year low

 

Britons' wealth fell to a five-year low during 2008 on the back of the housing market correction, figures have shown.

 

The typical household saw its net wealth drop to £109,000 during the year, the lowest level since 2003, according to the Office for National Statistics.

 

But it bounced back again to an average of £117,000 the following year as property prices started to rise again.

 

Despite the blip, household wealth has more than doubled in real terms since 1987 when it stood at around £56,000.

 

The majority of household wealth is held in property, with substantial amounts also held in life assurance and pension funds, with savings accounts the third largest area.

 

The fall in property prices and the economic downturn appears to have spurned consumers into better savings habits, with the amount people set aside as a percentage of household income soaring from a near 40-year low of 2% in 2008 to 7% last year.

 

There was also a slight fall in household debt levels between 2007 and 2009, with these dropping from 173% of household expenditure to 161% last year.

 

http://www.google.com/hostednews/ukpress/a...61289488670521A

 

UK Overseas Visitors Fall

 

The Office for National Statistics has revealed figures showing that the UK has had fewer visitors from overseas during the month of September. The agency says that 2.48 million foreign travelers made a trip to Britain during the month, whereas nearly 2.56 million made the trip in September last year. While they were in the UK visiting, they also spent £1.43 billion, which is 12% less than than last year. However, they have spent £12.57 billion during the first 9 months of the year, which is only 1% less than last year.

 

http://news.carrentals.co.uk/uk-overseas-v...l-34223071.html

[No6]

2010, the return of the IPO. This is usually a positive sign, although most in the UK have been AIM shares.

 

Stock market flotations are starting to pick up again and the majority of the new companies in 2010 have gone to premiums to their flotation prices - but there have been some notable exceptions.

 

This does not mean that it is easy to float at the moment as healthcare property investor Prime has found out this week. Prime announced its intention to list on 19 October and said that it wanted to raise £200m at a price range of 210p to 250p a share. There was demand for the shares but not at a price which satisfied Prime’s management.

 

According to the London Stock Exchange’s figures there were 130 admissions to the Main Market, the Specialist Funds Market and AIM in the first 10 months of 2010. Stripping out reverse takeovers, transfers to and from AIM and investment companies, leaves 51 companies, of which 16 joined the Main Market and the rest came to AIM. The Main Market companies include four international companies, which have gained secondary listings, so these are also excluded in the following figures.

 

http://www.digitallook.com/news/3829759/Ne...ername=&ac=

[No6]

Looks like the froth is being taken off the FTSE now.

 

[No6]

I get this feeling that once a compromise has been found for Ireland's banks by the EU, the markets will probably get back into santa rally mode. Current falls have happened at just about the right time to knock some froth off of recent price rises and set up the next move up into the new year.

[drbubb]

I get this feeling that once a compromise has been found for Ireland's banks by the EU, the markets will probably get back into santa rally mode. Current falls have happened at just about the right time to knock some froth off of recent price rises and set up the next move up into the new year.

You could be right. Maybe the relief will last thru Christmas, maybe not.

But at some point after that, the game will become; WHO's NEXT ?

 

An expert from HedgeEye is on Bloomberg now saying: It might be Italy.

 

So the choices are: Greece, Portugal, Spain, Italy ... and Ireland again.

 

Losts of risk out there

[No6]

You could be right. Maybe the relief will last thru Christmas, maybe not.

But at some point after that, the game will become; WHO's NEXT ?

 

An expert from HedgeEye is on Bloomberg now saying: It might be Italy.

 

So the choices are: Greece, Portugal, Spain, Italy ... and Ireland again.

 

Losts of risk out there

 

There is a lot of risk, but it is surprising how often time, or the ability to put things off, or allow some correction in the system, results in the failure of the total collapse that some seem to feel is inevitable. Our economic and financial system is very good at re-inventing itself over time. It doesn't mean it is right, it is just what seems to happen.

[No6]

This from Eric Fry in yesterday's Daily Reckoning.

 

In a recent missive, Rosenberg warns, "It may be time to avoid the areas of the market where net speculative long positions exist and are in the process of unwinding." In other words, it may be time to avoid the areas of the market that have become too popular - the "crowded trades."

 

Rosenberg highlights the following crowded trades:

 

* Equities: There are currently 5,780 net long contracts on the Chicago Mercantile Exchange (CME).

 

* Oil: There are a near-record 208,226 net long contract on the NY Mercantile Exchange.

 

* Gold: There are a near-record 253,528 net long contract on the COMEX.

 

* Copper: There are a near-record 25,139 net long contracts on the COMEX.

 

* Silver: Not a record but a still significant 42,556 net long contracts on the COMEX.

 

* Euro: Huge net speculative long position of 35,879 contracts on the CME.

 

At the other end of the spectrum, Rosenberg notes, volatility is cheap. "With the risk-on trade in full force for the last two months, the VIX futures have a net speculative short position of 13,345 contracts, which is at the high end of the historic range." [The VIX is an index of implied option volatility. The higher the index, the greater the level of investor fear; the lower the index, the greater the level of investor complacency. Shorting the VIX Index is, therefore, a bet against fear - a bet that rising stock prices will remain the status quo.]

 

In other words, investors are very complacent, which is usually the condition that precedes market selloffs. Curiously, investor sentiment has reached bullish extremes for stocks and commodities at the same time. Traditionally, these asset classes are non-correlated. But this time around, the two have been very highly correlated. If, therefore, these two asset classes are able to rally at the same time, they are also able to correct at the same time.

 

Net-net, if you're bearish on stocks or commodities, this is your moment. If you're bullish, take your time establishing new positions.

[No6]

Perhaps the biggest, oldest, shortest return IPO in the market

 

General Motors set for record share sale

 

Surprisingly strong orders have allowed General Motors (GM) up the size and the price of its initial public offering of shares on the New York Stock Exchange.

 

It means GM may now choose to issue up to $22.7bn (£14.3bn) of shares - the biggest in the US market's history.

 

The share sale will let the US government reduce its current 61% stake in the company to as low as 33%.

 

GM's return to the stock exchange follows its recent bankruptcy, delisting and $50bn government rescue.

 

Break-even

 

The car manufacturer said it had increased the number of common shares to be issued by 31%, following a similar increase yesterday of the number of preferred shares.

 

It also revised pricing of the common shares sale up to $32-$33 each from a previous $26-$29 range.

 

The decisions come after the banks arranging the share sale said they had received $70bn of bids, and had closed their books to new orders.

 

http://www.bbc.co.uk/news/business-11776734

 

U.S. Saved $28.6 Billion in Auto Bailout, Study Says

 

Nov. 17 (Bloomberg) -- The U.S. government avoided a $28.6 billion loss and saved more than 1.45 million jobs by bailing out the automotive industry, a research group said today.

 

The loss would have been caused by increased public welfare payments and lost tax receipts from workers had the government not provided $82 billion of assistance to the industry, said Kristin Dziczek, director of the labor industry group at the Center for Automotive Research in Ann Arbor, Michigan.

 

The study was released as General Motors Co., which received $49.5 billion in U.S. aid, prepares an initial public offering to help pay back the Treasury Department. The government also provided $13 billion of assistance to Chrysler Group LLC and $17 billion to automotive lender GMAC Inc., which later became Ally Financial Inc.

 

http://www.businessweek.com/news/2010-11-1...study-says.html

[No6]

Markets rebounded, looks like they like the news coming out of Ireland and some good company updates.

 

ADVFN Market Report

 

SABMiller is fizzing after a strong performance in all regions but Europe helped the brewing giant post a rise in profits in the half year to September 30. Pre-tax profits at the brewer of famous brands such as Miller and Peroni climbed to $1.69bn (£1.06bn) from $1.50m over the same period the previous year as revenues rose to $9.43bn from $8.84bn.

 

Business process outsourcing colossus Capita said revenue growth in the second half of 2010 has been subdued, but the bid pipeline is at a record level. The company said the pressures on public spending are having a bigger than expected impact on a small number of the group’s trading activities than envisaged at the halfway point of the year.

 

Anglo-Dutch publishing giant Reed Elsevier is trading much the same as it did in the first half, with subscription revenues constrained, and advertising, promotion and other cyclical markets continuing to stabilise. It reaffirmed predictions made at July’s interims of a ”modest” reduction in adjusted operating margin year on year due to a weak revenue environment and increased investment in legal markets.

 

Engineering and project management company AMEC has won a double-headed contract from ConocoPhillips for oilfield services in the North Sea.

 

In the FTSE 250, QinetiQ is on the attack after a sharp rise in half-yearly revenues at the defence technology group.

 

Halfords back-pedals a little after the bike and car part retailer’s results. The company reported a healthy rise in sales and profits in the 26 weeks to 1 October, but trading remains tough, with like-for-like sales under pressure.

 

Car hire firm Avis said current trading has continued to improve and expectations for the remainder of the year are unchanged. Overall rental income for the 4 months to end of October was up 4.5% from the previous year, having been 1.1% ahead for the six months to 30th June, the group said.

[No6]

Skip the doom and gloom about restraint, U.S. retail sales recovering nicely

 

U.S. total retail sales in October were 1.2% higher than in September and an impressive 7.3% higher than in October 2009, according to the Census Bureau. Retail sales are an often volatile series. Therefore, it is more informative to smooth the numbers. On a three-month moving average basis, U.S. total retail sales in October were +6.3% when compared with a year ago.

 

A key benchmark rate for retail sales is +5.0% year over year. At a normal inflation rate of 2.0% that means “real” spending by consumers is increasing at a 3.0% pace. Such an increase in consumer spending lays down a strong base for the overall economy, since personal consumption expenditures comprise 70% of gross domestic product (GDP) in the U.S.

 

Total retail sales have been higher than +5.0% on a year-over-year basis for the past eight months. While households and individuals may be striving to reduce their debt and tearing up their credit cards, there is still a significant degree of purchasing that is taking place.

 

During the recession, retail sales dropped an alarming 13% between November 2007 and December 2008. Since early in 2009, they have resumed an upward trend with about the same angle of slope as before the recession. They have now recovered 77% of their peak-to-trough decline.

 

http://www.reedconstructiondata.com/constr...s-recovering-n/