Market comments for Sept. 9th, 2011

Many aren't sure about whether the market will close down or rally later today. You can bet that because of what's happening in Europe on the debt crisis and because it it the 9/11 10th anniversary, it will close down. Add the fact that there is a terrorist warning and you have a recipe for many to dump stocks today. The ECB has confirmed the resignation of its Chief Economist J. Stark over issues on Eurobonds. This caused markets in Europe to drop sharply. Mr. Stark, one of the ECB's most outspoken anti-inflation "hawks" had opposed the ECB's decision last month to reactivate its government bond purchase program, as did the head of Germany's central bank, Jens Weidmann. To read more on this from the Wall St. Journal Europe, click here.

In Financial news, Consumer credit increased in July according to data released yesterday. For a context, June's data showed Consumer Credit at $11.3 Billion. Expectations were for this to be down to $5.0 Billion for July. Instead July's number came in at $12.0 Billion.

Today's release of Wholesale Inventories showed an increase of 0.8%, Expectations were for a 0.7% number for July. June's data came in at 0.6%.

Fed Chairman Bernanke did not reassure markets yesterday. Many are looking for the Fed to announce a QE3, but so far they haven't.

President Obama gave his fiery job's speech last night to Congress. It was one of his best speeches on this topic of his Presidency. The real question is whether any real action will come out of the speech and get approved by this Republican controlled Congress.

Consumers still paying off debt. A good thing for them but a bad thing for the economy

I came across a good chart and data provided by Haver Analytics on Consumer Debt. You will remember that I said in a recent post that the Consumer is 70% of the equation in Sales in this county and until they start really spending, the economy is going to stagnate. Add to that the fact that unemployment will also stay high as long as companies can increase productivity with their existing employees. In the chart above you can see that things don't appear to be trending in the right direction for the economy to pick up.

In the Haver Analytics posting today, here is what they said:

"Consumer borrowing continued its retrenchment during February. Consumer credit outstanding fell $11.5B, reversing a revised $10.6B January increase which was much larger than reported last month. The Federal Reserve reported late-Wednesday that the resultant 4.0% y/y decline in credit outstanding remained near the record. During the last ten years, there has been a 60% correlation between the y/y change in credit outstanding and the change in personal consumption expenditures.

· Usage of revolving credit was cut sharply. The $9.5B drop followed a modest January increase and left usage down a near-record 9.1% y/y. Versus February 2009, finance companies lowered lending by 14.3%, commercial bank lending fell 12.7%, pools of securitized assets fell 7.4%. Loans from credit unions offset some of these declines with a 6.5% increase while savings institution raised lending 1.6%."