If oil and gas prices stay near current levels, Credit Suisse estimates that a $55-75 billion 'tax' would be imposed on households this year, reducing consumers' disposable income by about half a percentage point. Fortunately, the compromise job stimulus/tax cut deal reached late last year - which temporarily lowers Social Security payroll taxes - provides households with an additional $112 billion to absorb the hit to their pocketbooks. We think this helps explain why retail sales continue to grow, even excluding gasoline sales, and purchasing manager surveys suggest ongoing economic expansion (which currently imply more than 3.5% annualized GDP growth). However, if oil prices continued to rise, we expect economic growth to progressively slow, at around $145 per barrel, they could threaten recession.

David Fuller's view The stimulus mentioned above and the Fed's QE2 are not the most reliable foundation for a strong economic recovery. Meanwhile, recent events in both the Middle East and Japan can only weigh on US GDP, in my view.

Most commentators appear to be impressed by the US stock market's resilience in recent months. Well, it commenced a cyclical bull market in 2Q 2009 as Fullermoney has maintained throughout Wall Street's recovery. However, we also maintain that both the S&P 500 Index (weekly & daily) and the Nasdaq 100 Index (weekly & daily) remain susceptible to some further mean reversion towards their medium-term trends approximated by the rising 200-day moving averages. This can occur in the form of sideways ranging or a decline but is usually a combination of these two.