Eagle Eye Opener: U.S. Consumer Spending Rises by Most in Five Months; Tremendous Market Risk Lies Aheard, Expert Warns; IPOs Raise $20 Billion in First Quarter 2013

U.S. Consumer Spending Rises by Most in Five Months (Bloomberg)

U.S. consumer spending rose in February by the most in five months as incomes increased, indicating an improving job market is boosting demand. Household purchases, which account for about 70 percent of gross domestic product, gained 0.7 percent after a 0.4 percent advance the prior month that was larger than previously estimated, the Commerce Department announced today. The median estimate in a Bloomberg survey of 78 economists called for a 0.6 percent rise. Incomes increased 1.1 percent, more than projected, sending the saving rate up from a five-year low. Labor market progress and an increase in household wealth tied to rising home values and stocks are cushioning Americans from the fallout of higher payroll taxes and costlier fuel. Strength in purchases is one reason economists project the economy to pick up this quarter after slowing to a 0.4 percent annual rate in the final three months of 2012.

The question becomes whether consumers have been feeling a false sense of confidence before the effects of the sequester and continuing federal deficit take hold.

‘Tremendous Risk’ Lies Ahead, Market Forecaster Warns (Yahoo.Finance)

A “big bear market” could be ahead as the market seems to be nearing a top,  said Steve Hochberg, chief market analyst at Elliott Wave International. “There are a lot of things going on in the periphery that we think are going to have consequences [for the market] as we move forward throughout the year,”Hochberg said. “I think there is tremendous risk in this market, and one of the reasons is because no one thinks so right now.” For investors, the adage “buyer beware” seems appropriate at this stage of the market rally.

IPOs Raise $20 Billion in First Quarter 2013 (Bloomberg)

Initial public offerings (IPOs) raised almost $20 billion worldwide in the first quarter, as Pfizer Inc. (PFE), Goldman Sachs Group Inc. and others took advantage of a booming stock market to sell businesses. IPOs generated 18 percent more than in the year-ago period, led by Pfizer’s $2.6 billion sale of its animal-health unit Zoetis Inc. (ZTS) and Goldman Sachs’s offering of shares in German apartment landlord LEG Immobilien AG, according to data compiled by Bloomberg as of March 27. However, IPOs declined to about half of the level of the fourth quarter, when companies raised about $37 billion. So far, individual investors seem to be holding back on cashing out as the market keeps climbing.