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June 06, 2006
Still Betting on the Consumer?
The Wall Street Journal reports:
Morgan Stanley expects U.S. growth to fall to 2.4% in the second quarter from 5.3% in the first. "The American consumer is now a prime candidate for the weakest link in the global growth chain," writes Mr. Roach. Weak labor income, a shaky housing market, high debt burdens and rising energy costs "are putting the squeeze on over-extended U.S. consumers when they can least afford it." Mr. Roach admits that he has been calling for the demise of the U.S. consumer for years, a call that many economists have made in vain. But he seems fairly certain the time has come for the consumer to stand down in the U.S., which will have ripple effects around the globe, as export-driven economies such as Japan and China feel the pain.
How about this reversal in Wal-Mart (WMT)? The stock gapped and moved above 49 for two days. This surge was greeted with a gap down and immediate drop below 47.5. It is not a good sign with the nation’s biggest retailer reverses on the dime.
Posted by Arthur B. Hill at June 6, 2006 03:02 PM