Consumer Transition

The thing we have been talking about over the past six weeks is falling into place. The consumer is going to get more practical as economic forces come into play. They are going to buy less junk and invest in more practical aspects of their lives. Target’s announcement today of wholesale liquidation of stuff people will not need any more is proof positive.

Other factors the market is facing over the next week are CPI and the June FED meeting. They will probably keep the market on defense but if you wait to buy a week from Thursday, you run the risk of paying significantly higher prices.

Commodity inflation picture has three camps at the moment. Metals (aluminum, copper, and Iron) are on defense, down substantially from recent highs, foodstuffs (corn, wheat, soybeans) are hovering below highs, and oil and gas are pushing on highs. Because of the dominance of oil, the overall averages are at highs. I still have 10 to 20 % of my portfolio short oil, in my mind, before stocks can take off, oil has to break.

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