Well, the first half of the year is in the books with strong gains in all the major Indices.

• Dow +8.04%
• S&P +8.60%
• NASDAQ +14.1%

But the numbers are misleading as the NASDAQ, despite its best first half start in fourteen years, has been under pressure while laggards have begun to come to life. Energy is the only losing S&P sector, but a good week became a very good week on Friday when the North American rig count declined by two rigs. It’s a small number, but any decline after a 122% increase in the past year was welcoming news.

I get folks still grapple with the idea we need crude around $50 for the perfect economic storm. WTI is breaking through $45 today, and that’s bullish for jobs and the market.

Consumer Dilemma

Personal incomes continue to edge higher and soon could match the tea leaves, which has augured for a surge in wages for many months now. But there are contradiction with respect to the fact people are reluctant to move to new jobs, which could be the best way to secure major pay hikes even as a record 6,000,000+ jobs are currently open.

The other, curiously, is the sharp decline in personal spending, which historical always outpaced income until recessions hit. I often wonder if we are in a period not unlike the post Great Depression period.

With the decline in spending, the savings rate has surged. Again, you have to wonder if consumers are worried about something down the road or still burned from events in their rear view mirror. I’m inclined to say it’s the latter.

Ironically, consumer sentiment for the first half of the year is the highest going back to the second half of 2000. One major problem is the divisions in America, which has created a 39% gulf in sentiment between republican and democrat voters.  

Volumes are going to be very light today as most traders are already on the beach, well, if you don’t live in NJ, where beaches and parks closed Friday at midnight as the government was unable to pass a budget deal. The market will close at 1 today. 

We hope everyone has a very happy and safe holiday. Happy Birthday America. 

Note: There will be no afternoon Hotline report or Portfolio approach today.