That plan should take care of the blood pressure!

Enjoy the weekend!

Have similar "chill" plans starting around lunchtime also. It's the balance of life.

Released on 6/30/06 For May 2006
Personal Income, M/M change
Actual 0.4%
Consensus 0.2%
Consensus Range 0.1% to 0.5%
Previous 0.5 %

Consumer Spending, M/M change
Actual 0.4%
Consensus 0.4%
Consensus Range 0.2% to 0.5%
Previous 0.6 %




Highlights
Personal income and outlays slowed in May. Personal income rose 0.4 percent in May, following a 0.7 percent boost in April. The May gain was above the consensus expectation of a 0.2 percent rise. Personal consumption for May rose 0.4 percent, following a 0.7 percent percent increase in April. The consensus had expected a 0.4 percent rise in personal consumption for May.

Further showing slowing in the consumer sector was wages and salaries which was unchanged in May, following a 0.8 percent jump in April. Personal consumption was up 0.4 percent, following a 0.7 percent increase in April. Spending in May was led by non-durables and services, up 0.7 percent and 0.5 percent, respectively. Durables spending dropped 0.6 percent with weakness in auto sales. The personal savings rate slipped one tenth to minus 1.7 percent in May.

On the inflation front, the overall PCE deflator rose a strong 0.4 percent with the core PCE up a more moderate 0.2 percent. Year-on-year rates jumped four tenths to 3.3 percent for the overall PCE deflator, with the core rate unchanged at 2.1 percent. The core rate is still at the high end of trend and at the upper limit that Federal Reserve officials point to.

Today's report indicates that the consumer sector has moderated somewhat in May while inflation continues under upward pressure. It is important to remember that May's softness follows a strong April and that one month does not make a trend. Overall, the consumer sector is still healthy and the question remains of how sustained the moderation will be and how quickly it will soften inflation. We will need to see a number of months of soft wages and salaries growth and spending gains before inflation expectations and actual inflation numbers come down."

Folks, EVERY piece of data we get lately points to a slowing economy and continued inflationary pressures. Ergo, the "One and Done!" crowd took the markets for a 200 pt ride yesterday. ????? Don't be fooled.

My plan is to buy this whole market much cheaper. Could I trade this? Yes, but not as well as some others here. I'll just wait for my sweet spot thank you. Then I'll hit it with all I've got. I don't need today, tomorrow or the next six months to make me rich. I don't even need these markets. As Bill knows I could just buy real estate instead.

So if it gets cheap, I'll buy it. If it isn't I'll make money elsewhere. It'll all be cheaper later on.

Yesterday was a great day for stocks in general, but an even greater day for the gold miners. On the real bad days for the market, gold stocks acted usually worse. This trend has been in place for quite awhile. No tickee, no payee. Can an upward trend in the market continue with gold doing better? This is not the history of the market, but maybe we are in a "new paradigm". Dino Kos and the central bankers will be working overtime to reverse it. The conundrum was due to foreign countries buying our long bonds - effectively neutralizing the bond market vigilantes. If this was all excess foreign savings, we wouldn't have worldwide inflation. The gold market has taken the place of the bond market vigilantes, Dino Kos, et al notwithstanding.

MarkM-

Excellent commentary above!

Re: "The personal savings rate slipped one tenth to minus 1.7 percent in May."

I loath appearing naive, but where is the funds coming from to support the continuing "personal consumption?

Just a rhetorical question.

Thanks

MarkM said:

"As Bill knows I could just buy real estate instead."

Mark, out of curiousity, what kind of real estate do you buy and in what region of the country ? Are you a long term holder or a flipper ?

TIA

Shanghai Gold Exchange to begin silver trading:

http://english.peopledaily.com.cn/200606/30/eng20060630_278678.html

oratier -- JMHO, it has been borrowing thru home equity loans, credit cards, etc. That's why many say there it's not so much a housing bubble as a credit bubble. And bubbles do burst!

Bill,

Thanks as always for your commentary, and helping to make sense out of all this noise.

The undeniable truth is that "reconnaisance aircraft" need to refuel once in a while. Enjoy your weekend!

Doug

Todd-

I was director of an international commercial real estate and economic development advisory group. Prior, I had my own development company.

oratier,

Consumption, driven to excess in the real estate market, is IMHO coming from the wealth effect brought on by generational transfers of wealth to baby boomers. Because the earlier generations put saving ahead of spending they created the capital formations necessary to build the N.A. economy to premier status in the gobal economy. Regretably, what we are seeing of late is the wasteful spending of capital on excessively large homes ( and multiples of them ) and luxury autos which would have been unobtainable without Beneficiary status under the Will. Would Dad be pleased to know that his children are using his hard-earned capital to lavish themselves in comforts and status symbols that he denied himself? Many of these new acquisitors do not have the cash flow from employment to carry the operational load indefinitely and the time has now come where reality sets in. The high-wage industry that predicated the capital formations before has been mothballed in order that consumption can be satisfied by sourcing goods from lower-cost economies. Unless America re-industrializes and goes back to the former ways of building and employing capital it's economy and way of life are doomed.