Economy in the middle of a tug-of-war between lower home prices, increasing stock market and lower gas prices – where does consumer stand?
Marla Guthrie
Dec. 8, 2006

The job market is plagued with underemployment. There is a tug-of-war between lower home prices, increasing stock market and lower gas prices. The economy is enjoying full but ender employment. That is typical of stagflation. What that really means is that there are plenty of jobs but not well paying respectable jobs. In other words, qualified people ready to perform high paying jobs are working in low wage environments.

The net effect is a deflation in the consumer front while inflation in essential services front. Consumers are paying where they are forced. Otherwise they are staying put. That is very bearish for stock market in the long run as there is little pricing power for companies.

The consumer will eventually further contract. But that will affect Euro Zone and Asia much more than US economy. The US exports will remain steady but the imports will plummet sending the word economies in economic recession.

Economy in the middle of a tug-of-war between lower home prices, increasing stock market and lower gas prices – where does consumer stand?
Marla Guthrie
The consumer will eventually further contract. But that will affect Euro Zone and Asia much more than US economy. The US exports will remain steady but the imports will plummet sending the word economies in economic recession.
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A steady Michigan Consumer Sentiment index with lower retails sales bearish for stocks – 1928-29 parallels
Sunny Peora
The stock market has lost touch with the real world – the grass root economy. Last that happened was in 1928-29. A severe depression followed that in 1929-33. 1928 Christmas was great for the Wall Street.
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A correlation between CRB index, Dow and VIX shows Stock market ready to plunge in January 2007
Peter Oberois
Stock market is guided by profitability. A sharp rise in CRB index means higher raw material cost. That, if significantly higher causes a major problem for corporations.
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Unemployment data ready to reveal economy stronger than many thinks but a major recession is eminent
Sam Adelton
The unemployment data will be surprisingly strong because of early Thanksgiving and late survey of last month. The real estate gloom is spreading fast in the labor market but this report will show stronger job growth than the consensus.
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European Central Bank President Jean-Claude Trichet signaled he's in no rush to boost interest rates – bullish for dollar?
Preity Gallop
ECB feels the rates are low enough to help dollar recover grounds and Euro Zone to keep growing. At the same time ECB is in no hurry to raise rates as US economy have started to slow down.
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Initial claims will fall by a massive 37,000 led by the service sector growth – bullish for dollar bearish for bonds and an opportunity to short stocks
Alan Hershey
The stock market is peaking for the last two months will lower momentum, lower VIX and higher insider sales.
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Insider stock sales surges to highest since 1987 stock market crash – Dow can tumble 2000 points in a month
Fred Day
If history will repeat, the Dow can be in the 7500 area by early 2008. The bear market will probably start in the first or second quarter in 2007.
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