Consumers Running Scared

MARKET REVIEW: Consumers Running Scared

Things on Wall Street went from bad to worse this week as the Dow closed below the 10,000 point mark for the first time since April. Consumer spending – or the lack of it – is the most recent worry for investors. Thursday brought news from the Commerce Department that consumer spending in July grew at its slowest pace in 9 months. All three major indexes tumbled…but who’s watching?

American consumers are clearly beginning to tighten their belts. This could spell even more bad news for the economy. Consumer spending accounts for two-thirds of U.S. GDP.

The Dow closed down 473 for the week to 9950. The Nasdaq was down 111 to 1805, while the S & P dropped 51 to 1134.

THIS WEEK in THE DAILY RECKONING

by Bill Bonner

08/31/01 MADAME DE ST. GEORGES

“…Most people take material progress for granted. But it is not guaranteed. Investors are shocked by the idea of a 17-year bear market. Economists are appalled at the suggestion of a Japan-style 11-year slowdown. But markets, assets, living standards, and incomes can go down for very long periods. Nothing in life is guaranteed…certainly, not progress…”

MADAME DE ST. GEORGES

08/30/01 THE 17 YEAR ITCH

“…In 1989, it was hard to find something negative to say about the Japanese economy. Every word was flattery as the Nikkei Dow rose towards 40,000…eleven years later, every headline about Japan makes the country sound hopeless. How long will it be before American reputations are flattened by a bear market just as those in Japan have been?…”

THE 17 YEAR ITCH

08/29/01 BULL MARKET IN BLAME
Guest Essay from Christopher Byron

“…For nearly four years, the analyst community on Wall Street, and the media organizations that covered it, engaged in what amounted to a massive, shameless and totally irresponsible free-for-all riot in pursuit of money. Action must be taken now to prevent an even more dangerous recurrence of such fraud…”

BULL MARKET IN BLAME

08/28/01 BACK TO TREND

“…What happens when bubbles finally pop? ‘Every bubble for which we have data…stocks, bonds, commodities and currencies…went back to trend, no exceptions, no new eras, not a single one that we can find in history,’ says Jeremy Grantham. If we are not mistaken, Chairman Greenspan’s reputation also seems headed ‘back to trend’…”

BACK TO TREND

08/27/01 PLANTING TREES

“…timber is the only low-risk, high return asset class in existence. People are not familiar with it…and what they are not familiar with they avoid. But timber is the only commodity that has had a steadily rising price for 200 years, 100 years, 50 years, 10 years. And a unit of wood, just the price of a piece of wood – in real terms – beat the S&P over most of the 20th Century, from 1910 to 2000…”

PLANTING TREES