Stocks tumble as consumer worries grow

[Grinchie]

Source: msnbc.com

Stocks headed lower after the Labor Department said personal spending fell 0.5 percent in September. The drop was in line with forecasts, but it was the largest slide in nine months and followed a 1.3 percent jump in August fueled by the government's popular Cash for Clunkers car rebate program.

The slide marked an about-face for the market, which rallied strongly on Thursday after the government reported that the economy grew faster than expected in the summer. Much of the 3.5 percent jump in gross domestic product was tied to government spending programs, however.

The poor report on personal spending cast further doubt on the economy's recovery, which many economists fear has been driven largely by the government stimulus. Without a rebound in consumer spending, which makes up a major part of the U.S. economy, investors worry the recovery won't last.



Read more: http://www.msnbc.msn.com/id/3683270/ns/business-stocks_and_economy/

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Yep, those darn Consumers with their 0.5% drop in consumption.

Never mind the fact that CIT is almost a sure bet to file for Bankruptcy tonight at 11:59 PM, unless some Givernment propellerhead decides to pull some money out of his A$$.

But at least we have Increasingly Higher Gas Prices, despite a complete lack of storage space for Crude Oil. Yay!

[AllentownJake]

1. They had that report yesterday

They tried to dump it on a Friday after the GDP report. If they would have released them on the same day there would have been competing economic news.

[onethatcares]

2. I am willing to bet that consumer consumption is set to drop even lower

jeez, everyone I know is wondering if they'll be employed next month, some even next week. With jobs scarce, credit blown out the window, health insurance costing an arm and a leg, along with gas prices rising. The consumer doesn't have much to be happy about.

Watch the shopping season this Christmas, it's gonna be the pits.

[grantcart]

3. Oil price increases are directly tied to the weakening dollar.

[metapunditedgy]

4. I plotted gas vs. $ value a few years ago, and gas was rising much faster

than the dollar was falling. Maybe since the big reset in the oil market things have normalized a bit, though.

[BootinUp]

5. nonsense

how do you explain the explosion prior to the dollar falling? It sure as hell wasn't a supply problem.

[Psephos]

6. Is your argument that there can be only one reason oil prices inflate? n/t

[BootinUp]

7. of course not, ask at post #3. nt

[Psephos]

8. You seem to imply it. From my perspective, 2007/8 was a bubble; 2009 is a no-faith in dollar action.

An oversimplification, perhaps, but useful anyway.

[BootinUp]

10. In addition to the falling dollar factor

I think you also need to consider that when the equities/stock market begins falling or levels out it seems there is a lot of movement in oil, it becomes more volatile. So some of the same things that caused the bubble earlier are in play again now. The dollar movement has an effect of course but it can't acount for all of the craziness in the oil market in my opinion.

[Psephos]

12. seems reasonable

There's a huge "red tide" of government pseudo-dollars washing through the system right now...the liquidity jumps from market to market, in search of safety, finding none, then moving nervously on. Volatility in commodities (which are tangible, unlike stocks based on companies with no earnings) reflects schizophrenia between trying to ride current trends for profit vs. trying to limit risk. I remember a year and a half ago when oil would jump $10 because a valve broke on a Nigerian pipeline, or because Ahmadinejad held a press conference. Same skittishness - smart people knew that oil was a tulip-bulb market; it was just a matter of when, not if.

Trying to find a decent investment in this time of immense uncertainty is a fool's errand. The current political climate is distinctly anti-business and pro-tax. The stock market especially is being held up by helium. Actual investors with a longer horizon are almost completely absent; capital firms won't lend money so instead they stash it in "investments" which they will pull out of in a heartbeat. Insiders at listed companies are selling in droves. Joe Mainstreet day-trading on his laptop is nowhere to be seen.

[grantcart]

9. my reply was to the OP who was indicating about the most recent increase in oil prices

obviously the oil market is a complex market and the futures market has been heavily influenced by the wash of speculative dollars outside the country that seek safe heavens while stock and real estate markets have declined and been more risky.

It is axiomatically true that if oil is traded in dollars and the dollar grows significantly weaker that oil will face increases. Strong dollars will buy more oil. Obviously the market is influenced by other elements as well.

If you are arguing that weak dollars have no impact on oil prices you are free to do so with every peer level economist in the world.

[BootinUp]

11. I'm fine with the way you put it there

no I am not arguing the dollar has no impact.

[ldf]

13. pump and dump

it's a rigged game, now with computers that do it.

if you have the money to own the computer, you're making money. if not, someone must lose for others to win the rigged game. too bad you are the loser.

[ronnie624]

17. Definitely.

A few months ago, there was news about the "top secret", sophisticated programs that are designed to manipulate and profit through high frequency trading on the securities market, illustrating clearly how it is in fact rigged. But that doesn't stop the 'experts' from treating us with their authoritative 'analysis' of markets "looking for direction" and "inflection points" and "red tide", or liquidity "looking for safety", or market "schizophrenia" and other such of hooey.

Post #16 actually makes some sense.

[Delphinus]

14. Damn!

They need to get their stories straight! Why, just Thursday, when I turned on NPR, they told me the recession was over!

[Selatius]

15. If FDR were in office and reinstituted the New Deal, this recession would be mild.

The WPA and the PWA and the CCC and a whole host of alphabet soup programs not only built up the nation's infrastructure for long-term viability but also to put money into people's pockets while the private sector was still on the ropes.

The Third Quarter GDP spike should be seen as a testament to what happens if the government aims revenue in the right direction.

[ozone_man]

16. Goldman Sachs was more important.

Trillions of dollars wasted on bailing out bank stock holders instead of nationalizing them, splitting them up and regulating them, so that they would never be too big to fail again and that the taxpayer would never be on the hook again.

Poor choices, and Obama was part of them, appointing Geithner, reappointing Bernanke, continuing senseless war in Afghanistan. Somethings to remember as the next dip into recession/depression accelerates.

Obama had his chance to be an FDR president, but caved in to the Wall Street interests who funded his campaign, like Goldman Sachs. In an economic situation like this, there aren't second chances when you just spent trillions in the wrong directions. Real change was possible, but he chose to prop up a failed system. FDR would have done things very differently, stood up to Wall Street and the powerful banking interests.