Is it a blip or have gas prices finally been the tipping card?
I have a feeling this is the start of the expected trend into recession based on the timing, but the early summer months’ data should tell whether it is real or not.
I’d say that we are feeling the combo of the hangover from the holiday season, the lack of MEW, and higher gas/food prices. Look at how much revolving debt went up too. It’s kind of amazing that it could increase that much and still leave retail high and dry. It looks like credit cards are getting used to service bills and other debt. If so, this’ll get nasty real quick.
Wonder if this will cause GDP to be revised down a bit…
Consumers are tapped out: household debt to income is at an all-time high (and matches the rate for Japan at the beginning of its decade-long recession).
Interest rates will resetting higher on teaser rate loans.
Employment is falling (look at the BLS details).
Roubini is now predicting Q1 07 GDP growth to be revised down to 0.7% and for Q2 07 GDP growth to come in at zero or negative.
I recommend that you get out of the market before everyone else wakes up.
HB/Matthew, the only bonds that I would touch would be U.S. Treasuries. I’m in charge of investing our company’s cash, and that’s where I park it.
All other bonds — including those from stalwarts such as P&G and utilities — are going to get hit by the return of risk premiums to historical norms (i.e., an increase in interest rates).
The return to historical norms for risk premiums may happen next week, in a few months, or next year; I don’t know when folks will wake up. But, I do know that they will wake up.
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