Economic Viagra Takes Time

Economic data welcomed back investors to the reality of recession, which I remind you is just now setting in. Still, investors were right to be enthused over the past few trading days. We just need some time for the Viagra to kick in.

(Stocks in this article: Nasdaq: SIRI, Nasdaq: XMSR, NYSE: CMC, NYSE: TTM, NYSE: F, NYSE: JPM, NYSE: BSC, NYSE: VLO, Nasdaq: NOBL, NYSE: TMA, NYSE: BAC, AMEX: SPY, AMEX: DIA, Nasdaq: QQQQ, AMEX: QLD, AMEX: DOG, AMEX: SDS, NYSE: PFE)

A trio of reports this morning reminded ambitious investors of the economic realities of recession. The federal government has gone to great length in order to preserve the economy and the stock market in this election year. Markets were rightly enthused by this effort recently, especially the Fed's work to protect the financial system from the one week demise of Bear Stearns (NYSE: BSC). This is being referred to as the current economic cycle's crescendo event, while we continue to point toward Iran here. Anyway, the Fed saved us as usual last week and the market reacted as expected.

Waiting for Economic Viagra to Reach the Bloodstream

We are in the period of the economic cycle where stimulants have been taken, but have not hit yet. You get me? The United States has not even recorded a quarter of economic contraction to this point, and heck, we still have not even closed the first quarter. Considering the decent probability of two consecutive quarters of contraction, which defines recession, there should still be a whole lot of bad news ahead of us. So, while we are getting excited based on expectations, we experience short-term disappointment that the good stuff has not kicked in yet. Get me again?

Weekly Same Store Sales

This morning, the International Council of Shopping Centers reported its weekly same-store sales data, and it was ugly. Sales tanked for the week ended March 22nd, only rising 1.0%. That compared to 1.6% growth the week before, and is markedly down from February rates that ran upward of 2.0%. Last year, sales growth ranged in the 2% - 4% area, and in 2006 ran 4% or higher. You see the trend... Consumers are spending less. Considering our economy is so dependent upon domestic consumption and spending, expect recession.

Consumer Confidence Index

The Conference Board reported its Consumer No Confidence Index for the month of March, and the call is unanimous; Americans officially believe the economy is miserable. The Index measured 64.5 for March, marking a 35-year low. This compared to expectations for a reading of 73.0, according to Bloomberg's tally. Yet another reason to believe consumers are closing the spending spigots.

Later on this week, we will get much more direct information on consumer spending when February's Personal Income and Outlays data is reported on Friday. That report could hold more punch that today's trio, so beware. Bloomberg reports consensus expectations for a spending increase of 0.1%, month-to-month. Spending rose 0.4% in January. You can imagine how dire the headline will read if the number undershoots consensus. And of course, this critical report that also contains the Fed's favorite inflation barometer, comes on Friday, when people are prone to panicked stock sales.

S&P Case Shiller Home Price Index

Down 11.4%! That's more like it. Yesterday's notation within the existing home sales report showed the median price of a home fell 8.2% in February. We, like you, were elated. However, today's data matched up better with expectations, as S&P Case Shiller noted prices fell 11.4% in January.

A day late and a dollar short? Yes, as usual. If February's early signs prove out, then today's data is muted and housing may be nearing bottom. But, don't get your hopes up. We seem sure to bounce around the bottom for awhile yet, unless the Fed goes to zero! (That's a joke, you inflation centric maniacs!) At this pace, it would not take long anyway, and tax rebates will be arriving with the spring flowers. Last I checked though, homes still cost more than $600; actually it's $196K on median. Still, too many mortgages are set to reset soon, and the flood of foreclosures continues, so while the pace of housing erosion seems to be slowing, the direction change is likely a ways off yet. Sorry Ara, my Armenian friend in the business.

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