The Bull grows fur and claws

NBCNews FirstRead.

AM Wed, 12 Oct

The Merrill Lynch research department yesterday presented clients with a list titled "Seven Constraints Facing the Consumer:"

1. Personal "savings rate at -0.7%;"
2. "Debt/income ratio at a record 124% (was 117% a year ago);"
3. "Housing affordability at a 14-year low; 16-year low for first-time buyers;"
4. "Fed tightening... - households have $2.3 trillion of short-term debt that will get dinged by the relentless rise in short-term rates;"
5. "Higher energy prices;"
6. "Lagging wages: average hourly earnings" are growing at the "weakest pace" since December 1990; and,
7. "Regulatory credit changes: Fed letters of guidance (mortgages), tightened bankruptcy protection laws (Chapters 7, 13), higher minimum credit balance payments."

A lot of lows, highs, tightening and lagging in all the wrong directions there.

They say "constraints facing the consumer" but there are a lot of non-wholesome harbingers for business in those dominoes above. "Scat" rolls downhil, and math reverberates.

Also, numbers 5 and 7 are going to converge in an unexpected storm for a lot of middle and lower income folk right around holiday season: 65-85% higher heating costs combined with new minimum payment formulae on credit card balances (higher, in therory, based on 4% of outstanding balance instead of 2%). Add in those lagging wages in #6 and come next fall, it's going to be pitchforks and torches time.