tons of consumer spending ?? have you seen these charts ??? JCP, JNW, COH, M if thats not screeming the "r" word ..i do not know what is ???!!!!
huge overseas growth - Growth that will slow with commodity prices hitting all-time highs and emerging markets showing double-to-triple digit gains over the past several years. low inflation - Wait until energy bleeds into core inflation. cheap dollar - yup. And this will help companies blow away the fourth quarter. Once analyst estimates take the conversion into account going forward, however, bye bye UPOD. And, if the dollar strengthens, watch out for some of the biggest downward revisions to earnings estimates we've seen in years. huge corporate profits - energy, agreed. Banks, nope. Consumer, not with the holiday season we're seeing shape up. global stability? -huh? this is one of the most tenuous times since the cold war. low rates - yup, rates that are so low in fact that once energy bleeds into core inflation, the FED has little room left to cut consumer spending - see huge corporate profits - not going to happen. The consumer never really "led" the market higher in the first place. It was the labor market coupled with home equity financing that drove consumer spending. Even you can't argue against the fact that home equity refis are over. And, on top of it, we're seeing many companies tighten hiring practices, especially in higher-paying industries like financial services.
Those stocks have been sellong off for while. This is nothign new. Consumer is still buying electronics and luxury goods. Stuff like Ipods, blackberries, computers, tv's, jewlery, and so on.
With what money? Real wages are flat-to-down over all timeframes and the risk of a significant decline in the near-term is increased as many, many firms have warned. Home refis are done. Gone. Do you really think that credit cards can finance the gap left by the decreased wealth effect of a declining housing market and lower real wages concomitant with a weakening labor market?
Wallstreet has ignored housing since um 2005. No one cares about mortages, falling house prices, housing bubble. The huge funds that move the market have been ignoring it and for good reason. Consumer spending is still rebust in spite of falling house prices and mortgage problems. I went to an apple store a few months ago and it was full of people buying stuff. Also, remember, that this housing 'bubble' hasn't affected all areas. Palo Alto, Menlo park and moutain view for example have seen steady appreciation in the past years instead of decline.