Consumer Sentiment Rally...
Follow what people do with their money, not what they say.
Consumer sentiment jumped due to the rally in the markets,
and the mainstream media's "Animal Spirits" talking points
agenda.
Go back and read what retail analysts Dana Telsey and Howard
Davidowitz had to say about what consumers actually did with
their money, not what they said to survey takers.
Bet on the walk, not on the talk...
cnbc.com
"At both the high end and the low end, we are basically
seeing the consumer only buying "necessities."
- Dana Telsey
finance.yahoo.com
"...the whole concept of the economy finding its footing was
preposterous" to begin with. We're in a complete mess and the
consumer is smart enough to know it. If the consumer isn't
petrified, he or she is a damn fool."
"The worst is yet to come with consumers and banks. The
country is going into a 10-year decline. Living standards
will never be the same."
This outlook is based on the following main points:
With the unemployment rate rising into double digits - and
that's not counting the millions of "underemployed" Americans
- consumers are hitting the breaks, which is having a huge
impact, given consumer spending accounts for about 70% of
economic activity.
Rising unemployment and the $8 trillion negative wealth effect
of housing mean more Americans will default on not just
mortgages but student loans and auto loans and credit card debt.
More consumer loan defaults will hit banks, which are also
threatened by what Davidowitz calls a "depression" in
commercial real estate, noting the recent bankruptcy of
General Growth Properties and distressed sales by Developers
Diversified and other REITs.
"The stress tests were a sham and part of a con game to get
private money to finance these institutions because
can't get more money from Congress. It's the ‘greater fool'
theory."
"We're now in Barack Obama's world where money goes into the
most inefficient parts of the economy and we're bailing
everyone out. The bailout money is in the sewer and gone."
- Howard Davidowitz
Bottomline: Meredith Whitney has it 110% right...
"Last year the stock market tanked the economy,
this year, the economy will tank the stock market."
When, not if.
SOTB |
