Eric Fry

Today’s issue of The Daily Reckoning finds a resurgent US stock market. Despite dipping – briefly – into the red for the year-to-date a couple weeks ago, the S&P 500 is closing out the first quarter with a gain of 6%! Despite the noteworthy stresses around the globe – and the considerable economic uncertainties here at home – the S&P sits less than one percent below its peak levels of the last two-and-a-half years.

So the stock market’s doing pretty darn well. The US consumer…not so much. The chart below, for example, looks nothing like the ascendant price chart of the S&P 500 Index.

Year Over Year Growth of Consumer Spending

Consumer spending, apart from spending on essentials like food and gasoline, is sluggish at best. A chart of disposable income, after taxes and inflation, would look equally dismal. In other words, despite some measurable upticks in economic activity, these upticks are failing to bear much fruit down at the level where real people earn and spend money. Inflation is chewing up almost all the statistical economic gains of the last several months.

Even though incomes are rising somewhat, inflation is rising just as quickly…which means that net wealth is going nowhere. Perhaps that’s why companies like Marriott International are posting disappointing earnings results. Earlier this week, Marriott disclosed that its “revenue per available room” (Revpar) will be lower than originally forecast, due to weakness in North American demand. International revenue remains “robust” however, according to Marriott.

Falling Shar Price of Marriott

Perhaps this “weakness in North America” is a one-off or perhaps it is a sign of things to come. Whatever the case, the contrast between the sluggish growth rates of the world’s Developed Markets and the robust growth rates of the world’s Emerging Markets is very real…and this contrast is becoming a staple of the global investment environment.

Eric Fry
for The Daily Reckoning

Eric Fry

Eric J. Fry, Agora Financial's Editorial Director, has been a specialist in international equities for nearly two decades. He was a professional portfolio manager for more than 10 years, specializing in international investment strategies and short-selling.  Following his successes in professional money management, Mr. Fry joined the Wall Street-based publishing operations of James Grant, editor of the prestigious Grant's Interest Rate Observer. Working alongside Grant, Mr. Fry produced Grant's International and Apogee Research, institutional research products dedicated to international investment opportunities and short selling. 

Mr. Fry subsequently joined Agora Inc., as Editorial Director. In this role, Mr. Fry  supervises the editorial and research processes of numerous investment letters and services. Mr. Fry also publishes investment insights and commentary under his own byline as Editor of The Daily Reckoning. Mr. Fry authored the first comprehensive guide to investing internationally with American Depository Receipts.  His views and investment insights have appeared in numerous publications including Time, Barron's, Wall Street Journal, International Herald Tribune, Business Week, USA Today, Los Angeles Times and Money.

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