Another Great Day to Be 100% Cash

Fun is fun, the Dow was down 160, now its down 149 and if anything it could turn into yet another Britney Spears Trading Session.
Today's selloff is being blamed on a disappointing report on manufacturing and the job market overshadowing the recent bull rally.  Come on Masters, the world economy's road to recovery will be slow and bumpy, nothing new here.

CONSUMER SPENDING
A recent report suggests that even if two million jobs are added per year, it will take seven years to restore employment to pre-recession levels, read more about it at WallStNation.com (click to read). How in the hell can you expect people to stimulate the economy if you don't have a job?  Its just crazy pills. Consumer spending accounts for two-thirds of the U.S. economy, and the machinery of American advertising, marketing, media and finance all encourage the consumption habit. 

However, Consumer spending, which makes up 70% of the economy, rose sharply in August as car buyers took advantage of taxpayer-financed rebates under the government’s “cash for clunkers” program, the Commerce Department reported.

While the 1.3 percent spike in spending was the largest in nearly eight years, economists said it was not the foundation for any long-term rebound in the consumer sector. The government’s $3 billion clunkers program has ended, and automakers are bracing for a drop in September sales from a month earlier.

With consumers still worried about losing their jobs and the value of their homes and investments, economists said the surge in spending was probably a one-hit wonder. Still, it was the fourth consecutive month of growth in spending.

Re-visit Sell Before its Too Late an article we put out on Sept 17th, still some relevant material in there and supports why we have been pushing a large cash position.

The government is releasing its monthly report on unemployment Friday, and economists expect that the unemployment rate will rise to 9.8 percent from 9.7 percent, already the highest levels in 26 years.  Thus, think things are bad today, if that report is worse than expected the market is really going to Shitsville.

Hang in there and happy safe investing.

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