No More Credit Spending

consumer borrowing fallsWell, consumer borrowing numbers came in at the end of trading and blew expectations out of the water. Analysts were surprised after expecting a $6 billion drop in consumer borrowing to see an actual $15.7 billion drop, more than twice the amount economists expected. The results show that indeed consumers are still very weary of spending in our current crisis. The scary part is, is that March's number was originally $11.1 billion, which was later revised to $16.6 billion. It will be interesting to see where this number is revised to.

So, from today we learn that more people are losing jobs, thus reducing discretionary income. On top of that, we learned that more and more people are saving more, thus reducing spending. The combination of the two can be devastating on GDP, considering consumer spending makes up 70% of the index. Such data gives strong support of a continuing downward economy. The goal to bring us out of recessions is to spawn more consumer spending. We are only scaring consumers, causing them to save more.

Monday should be interesting as we see this new storm collide with Obama's new stimulus speech. More and more data is over ruling politician's words, and the more we see this, the more the market will begin to react. Tonight's podcast will have an update of my current positions, just to give everyone a refresh. Have a great weekend, Happy Trading.

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  1. Alexander Says:


    What about the tech sector? It seems to me that this is the favorite sector right now of the mass.

    Rimm, aapl, goog, amzn are again back in vogue....

    Looking at the charts of tech stocks and one wonders if there has ever been a crash in October....

    Most importantly, valuations are much richer than any other sector....

    Most importantly, Cramer loves tech!

    Personally, if the market falls apart again (which I expect) I think will suffer the the consensus right now is that tech will lead this "new" bull...

    what do you think?

  2. H.J. Says:

    FF, you have been just wasting people's time by being short for the past 8 months. People listening to you have lost all their money buying faz and srs. Shame on you. You too away a "once in a life time opportunity" from people listening to you. I know "Kevin" from the chat section who was one of the victims. Just a warning to you that there are still a lot of bargains for you to buy. If you miss the boat now, you may miss it forever. I feel really cheated by shorts. I will run this bull until shorts capitulate and let this economy heal naturally by itself. You may continue to short, but I will thank you because I will buy more good stocks (not the bankrupt ones like gm off course). You have been warning that there will be a lot of mini GM scenarios that will keep the stocks down, but you were dead wrong. Yes, GM goes to zero, but other good ones look at it as a relief and market rallies. Your warning for commercial real estate may be right, but it will only affect the problematic stocks. I should remember not to listen to people with economic education like you as stock market apparently doesn't follow your analysis. You are similar to the analysts. They downgrade a stock like rimm, palm, etc. and use it as an opportunity to load up, with the difference that you are honest in your analysis and probably suffer by being short. But, please stop fooling people. I guarantee that "Worst is Over". You will never be able to buy RIMM for $35, GE for $6, GOOG for $280, C for $1, BAC for $3, etc. etc. Stop fooling people, and try to give some long ideas for your readers instead of being a stubborn short.

  3. Anonymous Says:

    I like the more frequent posts.

  4. Finance Fanatic Says:

    Your angry rant is a waste of space on this comment section. People "listening to me" are making their own decisions. In fact, many people on this site have made their own decisions. My portfolio happens to be up significantly this year, much do to SHORTING in the beginning of the year, than going LONG in early March. Many disagreed with my "cautious" stand I was taking throughout most of April and May, but it has paid off for me. Other's decision to go in fully into the short side, was their own decision. I recently took some stronger short positions, as I feel we are on the verge of a turn.

    HJ its really easy to talk about the past 3 months in hindsight. The US was flushed with trillions of new equity from the Fed, a quick stimulus is no surprise. I have made a lot of money on the bull side, just as I had on their bear side. My opinion is my opinion, if you GUARANTEE a bottom, then go open a hedge fund, and guarantee it. However, I would be very careful with your mindset in as tumultuous of an economy that we continue to be in. Believe it or not, but current stock prices are not a strong indicator of the actual state of the economy, especially right now. Nobody is being "fooled" here HJ.. Next time see a therapist before vomiting such nonsense. I do not mind opposition on this site, but there is a way to do it respectful. Good luck with your guarantees HJ. We'll talk in a few months

  5. H.J. Says:


    I did respect you, but also upset with your lack of wisdom and timing the market wrong by throwing fear to your readers all the time. I have probably made more money than you. I hope you are honest about your strong gains. How are your FAZ $50 options doing? Good luck with that. You better be respectful and see a therapist for yourself. Just mind you that people are timing the market a lot better than you. Go sign up for something like vectorvest. Their analysis and stock picks are a lot better than yours. And, yes, I guarantee your dream of DOW to 3000 is wrong, and guarantee that you won't see the bottoms for the good stocks again for the next few years at least.

    Just as a simple argument consider the time frame for 'the past 8 months' not only the past two months. The market has been in a terrible crash, however, all the shorts have done terribly bad. Sure, you could earn some money "very quickly" by shorting (and you can do it always on bad stocks all the time), but your bet against the stock market as a whole is "wrong". It will recover and you missed the bottom. You better accept it. Again, I do have a lot of respect for you and do not want to ruin your personality, but I do see and believe you have been wrong and specially your timing. Simple argument: If you kept buying any stock during the past 8 months and specially during the panic times when you and your followers were calling for DOW 3000, you would have done "a lot" better. I am not worried about myself as I am doing fine and ignore your insult part of your message. I , however, feel bad for the poor beginners who find your website and lose their money listening to you. And don't try to tell me there are no people like that. You somehow advertise in google messages of every stock and probably have a big hit for your site. So, you need to act more responsibly. I feel bad for people like "Asim" who lost all their money ...

  6. Finance Fanatic Says:

    I feel bad for the millions that went down with GM, WAMU, Bear Stearns, Circuity City, Lehman Brothers, Chrysler and the many others that are to come. If bears have been playing this market correctly, and been patient during this bear market rally, then they will have not lost some or especially ALL their money.

    Just as people rushed to the short side in February, they will do so the long currently. Unfortunately, performance is based on timing. And the fact that I was being hounded for my recent decision to wait conservatively the past 3 months, I believe, shows my responsibility. Sure, I have had trades that have not worked out, who hasnt?! Here are just a few of my most recent that have done very well!

    SRS Calls - 46%
    FAS Puts - 37%
    Apple Calls - 92%
    GDX Calls - 88%
    BofA - 62%

    So, I have some cushion to make a bad call. Sure, I got in early on some shorts in April, but notice my always LIGHT ROUND, which is the purpose of a light round of buying, they're riskier buys. I am only responsible for my portfolio performance, and I have been quite pleased thus far.

  7. H.J. Says:

    Thanks FF, Are you bullish on BAC right now??

    What ticker are you bullish on except short ETFs at this time?

  8. Anonymous Says:

    SRS calls 46%???? You must have day traded that one.

  9. Finance Fanatic Says:

    Anon, it was about two weeks ago, I took the June option, it was moving very volatile, and I caught it on the right bump, only held it for two days.

    I'm very bullish on shorting retailers right now, I think they've been bolstered up by artificial government spending, as it is clear that consumers are not spending, but saving. So when we start to see some volume back and less manipulation, that's my first stop.