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Consumer OpEx

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Appropos of my earlier post about Iraq, I haven't heard much lately about energy costs, now that the war talk has waned. Again, with an economy on knife's edge between growth and contraction, it's important to keep these on your radar screen. Let's look at the full energy spectrum: crude oil, natural gas, gasoline, coal, and propane. Year over year price increases for all of these are, respectively: 16%, 83%, 18%, 13%, and 45%. [For those of you with a Bloomberg you can pull up one year charts on crude oil, natural gas, gasoline, coal, and propane with the following tickers: CL1, NG1, HU1, QZ1, and PN1. I think you'll find the charts much more telling than the figures above]. I will try to post the graphs associated with these commodities, as they are much more interesting than simply the price appreciation alone.

The point here? Consumer energy costs are up meaningfully year/year. Maybe we haven't seen a real uptick in consumer spending (see today's retail sales figures from KSS, JCP, MAY, others) because they are spending all of their mortgage refi and (soon) tax rebate dollars on energy costs. Despite this backdrop, retail stocks specifically and consumer discretionary names in general are still pricing in a serious consumer spending rebound. Incredible.
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