The Recovery Is Still Anomalous

As our president stays in the role of cheerleader and, as Financial Times columnist Clive Crook said recently, willing the end to problems but not the means, just how confident dare we be? Income was reported up 1.4% last week, but most of that came from one-time government transfer payments. Excluding the government largess, the monthly reading would have been a gain of 0.2%. Real wages (adjusted for inflation) were actually off 0.1%, which was the ninth monthly decline in a row.

Durable goods orders for May were up 1.8% vs. April. But shipments of durable goods were off 2.1%, which was the 10th month in a row of declining shipments. California housing prices were up last month for the third monthly gain in a row and the median home price rose 4.2% to $267,570. Inventories of homes for sale in the state fell to 4.2 months from a peak of 8.7 months in May of 2008.

But you have to wonder: Would the numbers be as good if California didn't have a $10,000 tax credit and some buyers didn't also qualify for the federal tax credit of $8,000? With a statewide unemployment rate of 11.5%, it's hard to imagine the good times will continue to roll.

Jake Fuller, Soleil's crack lodging analyst, just completed a survey of monthly online air-ticket bookings. Priceline (PCLN - commentary - Trade Now), Orbitz (OWW - commentary - Trade Now) and Expedia (EXPE - commentary - Trade Now) are all seeing increased leisure ticket volume. Hertz (HTZ - commentary - Trade Now) and Carnival Cruise Lines (CCL - commentary - Trade Now) both see an uptick in activity in their businesses.

This would square with the recent University of Michigan consumer sentiment survey, which was up last week for the third month in a row, albeit still at very low levels. But Jake doesn't see an improvement yet in corporate or European volumes so the recovery in this area is limited.

The recovery in general is spotty. I believe it is under way, but "less-bad" news is losing its ability to inspire stock-buyers. The recession is over but the nature of the recovery is still to be determined.

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Vincent Farrell Jr. is chief investment officer for Soleil Securities Group and a regular guest on CNBC and other national print and broadcast media.

Prior to joining Soleil in August 2008, Farrell was a principal of Scotsman Capital Management. Before that, he was chairman of Victory Capital Management of Cleveland and chairman of Victory SBSF Capital Management in New York. He was a founding partner of Spears Benzak Salomon & Farrell, which was acquired by KeyCorp in 1995. Vince held a variety of positions in his 23 years at SBSF, including chief investment officer, and he served as the portfolio manager on a number of the firm's largest client relationships.

Prior to joining SBSF, Vince spent nine years at Smith Barney as a vice president, sales.

Vince graduated from Princeton University in 1969 and received his MBA from the Iona College Graduate School of Business in 1972.