I'm far from an economist, but...

Well R, I had the same reaction as you - yet the markets have reversed course and are now up...I read alot of blogs, read the research and the fundamental opinion suggests to me that the US economy, and consumption are headed for hard times.

From a market perspective however, the Fed and the gvt are moving heaven and earth to postpone and delay the adjustment - which may be the right thing to do (we shall see). Unfortunately i think a number of market participants are short, and they are getting killed in the rally, which has now moved from financials, homebuilders and RE to the US$ (and sell commodities) so in my mind alot of what we discuss is "priced in" - further bad news may be offset with the monetary and fiscal policy that is being thrown at the problem(s) which postpones a "sharp" downward adjustment. In summary we may be right about the fundamental data over the next 12-18 mths, but the market has moved on. Rgds.

I attach a link which summarises neatly the issues that a number of traders/analysts find themselves in... http://seekingalpha.com/articl...urce=yahoo

and bulls don't care L-3 assets.

http://www.bloomberg.com/apps/...refer=home

Well the numbers are great and so was Potemkin?s Village. I guess this is typical keep the economy going until elections are over no matter what the long term damage. The economy is sliding into a deep recession and numbers for GDP were an illusion. The FED estimated the inflations rate @ 2.6% as if the rest of the country was blind. Most people out there really believe that the inflation rate is more like 5-7% and I am one of them. Take this realistic inflation number and GDP actually fell by at least 2.5%. This is the second quarter that the FED has underestimated the inflation rate and conveniently came up with an anemic growth rate of .9% annually.
The housing market fall is accelerating and the FED keeps pumping billions into the banks. This cheap money will slosh around but the bond traders (smart money) will not touch the toxic waste called CDOs, VIE and XYZs. The consumer is tapped out but the FED states that consumer spending is flat. Plug in the huge increase in gas and food increases and the consumer is spending just to get by.
The 600 dollar ?feel good? will only pay for two months gas. Natural gas and oil increases will by themselves eat up the six hundred.
Consumer credit card debt increased at %5 in March alone. This is not a good sign. It means they are tapped out and cannot extract more money from their house so they are using plastic. Obviously this cannot continue for more than a few of months. Then the defaults start on the credit cards.
We keep hearing the worst is over yet the adjustable rate mortgages peaked in February through March of this year. SEE credit card debt spike in March. The delayed reaction will take minimum three months to show up on the banks delinquent list and 6-8 months for foreclosure. At that point the banks will dump the house on the market since they will already be full of REO properties. About that time the ALT-A and Option arms begin to reset. Many people will see their house values cut in half and just throw in the towel even if they could continue to pay the mortgage. Who wants to spend the rest of his life just to break even on their mortgage?