Thursday, April 18, 2013

I don't get it.

For years here and elsewhere I have been advocating a neo-WPA or some other organization to put government money to work hiring people to construct projects benefiting the American people - we got ARRA, an uninventive act funneling money into state Departments of Transportation for fixing potholes.  Generally, though, we are propping markets on the outlook for future growth, stuffing the individual 401k's and pension funds with stocks that now stand to get sideswiped immediately after tax season.

Unsurprisingly, consumer growth could not happen between corporations maximizing profit by laying employees off, and crude furnishing the oil companies with 40% margins effectively starving the rest of the economy of a revenue stream.

All of this has played out in slow motion so plainly, that I feel like everyone sees it, and yet, no one does anything about it!  But finally we have crude backing off to a more sustainable economic level and the market faces unrelenting sell pressure.  I don't get it.

We are early in the consumer credit cycle with home and credit debt refinancing, and the home remodeling and resale market in full swing.  The cost to the consumer of gasoline should come down to a new, higher level than previous good times, increasing vehicle mileage, while lowering expenses to merchandise providers of all stripes.

Falling oil is not prima facie evidence of deflation, just as trailing consumer data isn't prima facie evidence of a weakening economy if on the back of a rising crude spot.  Because merchandise providers don't need to change pricing policies with greater discretionary income coming from fuel economy, the prospects for broad benefit to the American and world economies improve imminently.  A good deal is still a good deal.

I guess the principal purpose of this writing is to declare resentment for the way the market has behaved lately.  It is clear to me that a battle rages in the world between white and black hats.  Now that this economy's millstone has finally been lifted - crude - the market is dumping trailing data.  Why?

Now that a realistic prospect for consumer spending is here, it's hit the bids out of the gate.

I don't get it.