Let me add....until now, the American consumer has not started saving again (and thus cut spending)...the American consumer has continued to reject reality, and spend as if stocks were going up 20-100% a year...I think many stock owners were hoping for a sharp rebound...now that their 401k are down 40, 50%.....there is no way this can't impact consumer spending
I think behavior is beginning to change right now, and will continue all year. I think the American consumer knows the party is over. And when unemployment starts rising (which it will), and consumers start saving...well, consumer spending will fall....
Also, the break in psychology is important...and the bad news becomes circular....once J6P starts saving, he becomes more open to more saving....as the bad news continues in...folks will remain cautious, I think....also, like tech stocks, there has been a burst of consumption over the last few years....i think many can go without new toys for a while still....J6P pretty loaded up...
The second shoe still to drop, I think, is recession hitting Europe...that starts this summer...
I see these 2 things are the catalyts for a longer-term bear here.....to keep the markets from rising off the mat this summer.. |
