Stocks Don't Worry About Crude
Clorox may be a takeover target for an acquirer other than Carl Icahn.
The January change in disposable personal income (DPI) was affected by two large special factors. Reduced employee contributions for government social insurance, which reflected provisions of the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, boosted personal income in January by reducing the employee social security contribution rates (employee contributions for government social insurance are a subtraction in the calculation of personal income). The January change in DPI was affected by the expiration of the Making Work Pay provisions of the American Recovery and Reinvestment Act of 2009, which boosted personal current taxes and reduced DPI (personal current taxes are a subtraction in the calculation of DPI). Excluding these two special factors, which are discussed more fully below, DPI increased $11.4 billion, or 0.1 percent, in January, following an increase of $48.5 billion, or 0.4 percent, in December.
-- U.S bureau of Economic Analysis
This morning's strong spending number (which showed the largest increase in more than a year and a half) reflected less an improving retail picture and more a result of tax changes that were put into place Jan. 1, 2011.
By contrast, personal spending did not meet consensus forecasts (rising by 0.2% vs. forecast of +0.4%). Importantly, adjusted for inflation, real personal spending dropped by 0.1% in the past month.
A cautious call by UBS this morning, with a de-emphasis on companies leveraged to the economy and an emphasis on defensive issues:
More balanced performance ahead: Performance of cyclical sectors relative to defensives is apt to be more balanced going forward. Indeed, the duration and magnitude of cyclical outperformance has already lasted longer than history would suggest. This is largely explainable given the severity of the downturn, the strong rebound in earnings growth from cyclical sectors and the manner in which global growth surprises reaccelerated over the back half of 2010. However, we anticipate sector returns will be less delineated along cyclical-defensive classifications as we move forward.