6/10/2016
By Charles Payne, CEO & Principal Analyst

Consumers have put the chill on credit card usage in April after a monstrous surge in March.  Still, the pace of credit card usage is increasing and swiftly heading back to all-time high levels. This trend is setting off alarms for many, especially when it’s coupled with delinquency rates edging higher. Yet at the current pace, it would be unlikely that we’d eclipse the old record until the very end of the year.

However, I say that it’s too early to hit the panic button for a number of reasons.

People are more disciplined with their spending. Consider the debt-to-disposable income; it peaked at 23.4% in April 2004, and tumbled all the way down to 17.7% in December 2012 as consumers were still licking their economic wounds.  At the current 18.9% ratio, it’s a long way from being outrageous or a red flag unless you’re at the Fed or the incumbent political party looking for consumers to step up to the plate.

The lingering fear that’s kept consumers from going nuts with their credit card has also cast a dark shadow over the rally.  Everyone is either a critic or a skeptic; some are even betting against it, including the infamous trader George Soros; the man who once crushed the British Pound is now looking for stocks to get hammered.

He joins a long list of high-profile bears, but the good news is that these folks often make bets that take years to work out and sometimes those bets flop.

Even though the market finished off the lows of the session, the only winning sectors were utilities and consumer staples.

There is no need to panic even if the Lords of Wall Street are trying to get you to head for the hills.

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Charles Payne
Wall Street Strategies

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