The economy shrank at a worse-than-expected 6.1 percent pace at the start of this year as sharp cutbacks by businesses and the biggest drop in U.S. exports in 40 years overwhelmed a rebound in consumer spending.
Consumer spending's resurgence is very odd at a time when job losses are rising and workers in major sectors - financial services and automotive manufacturing - are facing pay cuts. Is the Commerce Department gaming stats on consumer spending to make them look rosier than reality? And why is the stock market still looking past the avalanche of bad news in this report?
I don't have the answers to those questions. I only have the answer to this question: What am I doing with my money in response?
I'm still shorting SPY, EFA, IWM, and VWO. Sooner or later (probably sooner) Mr. Market will take note of the bad news.
