Over the past few weeks we’ve seen a differentiation developing in the stock market with outperformance of those name’s that are exposed to growing inflation expectations and those co’s that have large exposure to overseas markets relative to those co’s that are US centric only, dependent on the US consumer and with little pricing power. The reason is clear as the US struggles with economic growth relative to the rest of the world due the anchor of enormous debt. Today we’ll get info on all the factors that will be a cloud, in my opinion, over the US economy for a continued period of time, consumer spending, the labor market and the balance sheet of the consumer. Retail Sales, Jobless Claims and the Fed’s Q1 flow of funds are all out. As of Q4 ’08, household debt as a % of disposable income was 123% up from 96% in ’01 and 83% in ’95. The Treasury today goes back to the well with a 30 yr auction and with inflation expectations at a 9 month high.
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