Eric Sprott - The Single Most Important Economic Indicator

Just how bad have things been at the consumer level? Hedge fund guru Eric Sprott said the single-most important economic indicator of the past four months came from Wal-Mart chief executive Mike Duke, who literally said that his customers were “running out of money” much faster than they were a year ago. His evidence: customers are doing their bulk shopping at the beginning of every month (minutes after cashing their paycheques) and business drops off right after that.

“People’s incomes haven’t been going up, but their costs have,” Mr. Sprott said. “It’s palpable what’s happening, and it’s not good.”

His favourite “negative” indicators include U.S. bank failures (which increase every week) and over-leverage in the banking system (a huge problem in Europe). But the lesson of the past few weeks is that any investor can find a negative indicator to suit his or her taste right now. They all boiled over into a panic on Thursday, and if all those Harvard MBA recruits want to keep their jobs, that panic had better recede pretty soon.

- Read the full article here:

http://business.financialpost.com/2011/09/23/reading-the-market-tea-leaves/