Before I start I wanted to let everyone know that I will be in and out throughout Labor Day. I am on vacation so it might get quiet around here at times.
Just a quick video tonight. Davidowitz is one of the best retail analysts out there. He sees what I see: Consumer destruction! For whatever reason, the market continues to ignore it.
The reality folks is the economy sucks versus a year ago. Stocks are "recovering" by slashing costs and firing workers.
The reality is from a revenue standpoint retail sales are down nearly 10% versus last year. Recovery? Where?
Without year on year top line growth, the economy will continue to struggle. I see no catalyst that will reignite the consumer. Jobs, earnings, and savings are all dropping.
Trying to live in a "bubble world" thinking that things are turning around is a good way to get crushed investing in the stock market over the long term. There will be intermittent bear rallies as we work through the worst collapse since The Great Depression.
However, one fact remains:
There is simply no way that this economy can recover in only 12 months as the consumer deleverages and repairs its balance sheet. The consumer is now faced with paying off unprecedented levels of debt.
It will take years for these wounds to heal. Wall St isn't ready to accept this as they try and speculate themselves into a recovery.
The market is starting to remind me of the time right before the tech bubble burst. It's filled with blind speculation based on ZERO fundamentals. Stocks are rising at an unsustainable pace. Bubblemania is back!
Let's all remember: Without the government stimulus this economy would be a mess. Eventually, the punchbowl MUST get yanked as the government is forced reign in spending. The speculators will once again be left holding the bag when the fundamentals return as they always do.
I am amazed at how investors continue to return to this casino after getting faceplanted with a 50% loss TWICE on the S&P in the last 10 years. Some people never learn. Perhaps we are addicted to bubbles?
The market is betting on a recovery. I see nothing of the sort. We will see who is right a few months from now: