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Two Ways: Consumer Credit Contracts Again

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Strengthen your portfolio in good times and bad.

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Consumer Credit Contracts Again in August

Consumer credit fell by $12 billion in August -- an annual rate of -5.8% and marking a seventh consecutive decline, according to a report released yesterday by the Federal Reserve.

In a story by Bloomberg, July's contraction, however, was revised upward to 9.1%, but the series of declines marks the longest streak since 1991.

Revolving debt, such as credit cards, fell 13.1% in August -- a decline of $9.9 billion. Non-revolving debt, which includes auto loans and mobile home loans, fell 1.6% -- a decline of $2.1 billion.

From the Bull Pen: Although the consumer-credit contraction is significant, what investors must realize is the much larger role of government in all of this mess, a reason for higher equity prices. Bulls can consider health-care company Johnson & Johnson (JNJ); there appears to be a floor near 59.50. One can set a sell stop below that level.

From the Bear Cave: If you're looking for a downside play, a failure for subprime consumer lender Capital One (COF) near $39 could signal a double-top. If and when.

A Quick Check Around the World

Asian trading closed with the Nikkei 0.34%, India 0.22%, Hang Seng 1.18%, Shanghai (Closed), and Taiwan -1.38%.

Across the pond, we see the FTSE 0.63%, CAC 1.23%, DAX 1.20%

As of 8:15 a.m. EST, S&P Futures are trading +8.00 to 1061.75 and Nasdaq futures are +11.75 to 1719.75.

A Look at Commodities

Over in commodities, crude oil is +0.70 to 70.27 while gold is +11.3 to 1056.00 this morning. Silver is +0.34 to 17.85 and copper +7.900 to 285.85.

The dollar index is -0.4550 to 76.2100.

On the Radar

Economics

08:30 Initial Claims
08:30 Continuing Claims
10:00 Wholesale Inventories (-1.0% cons.)

Also be on the lookout for today's 30-year Bond auction results at 1:00 PM EST. Click here for the full trading radar.

Remember, Minyans. It's okay to be wrong. The real sin is in staying wrong. Good luck and have a great day.

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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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