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Two Ways To Play: Consumers Caught In Squeeze Play


Strengthen your portfolio in good times and bad.


The US consumer faces tough times ahead. According to Bloomberg, Oppenheimer analyst Meredith Whitney recently told clients that consumers will by all accounts be hit with a "liquidity squeeze" as banks become more reluctant to provide mortgages and shrink lines of credit.

"The entire mortgage market hit a wall," Whitney said. And home loans likely dropped in the last quarter. According to data by the Federal Reserve, it would be the first such occurrence since the second quarter of 1982.

Unused lines of credit may also be on the chopping block to the tune of 45% over the next 18 months.

From the Bull Pen: A pullback today wasn't much of a surprise. What was surprising was the magnitude. Will all the government intervention result in a hyperinflation scenario? Did the Natural Gas ETF (UNG) provide any hints today by closing up over 1%? Bulls attempting the upside can set sell stops near $26.

From the Bear Cave: Credit-card transactions will likely get cut in Whitney's scenario. Those bearish can consider a downside play in MasterCard (MA). One option is to initiate a position on a rally toward $150.

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No positions in stocks mentioned.

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