Consumer confidence continues low, despite how much the market has rallied. The wealth effect is not working this time as it has in the past. Consumption will only increase now if jobs begin to get created en masse. This doesn’t bode well for the holidays or the domestic inventory restocking thesis.
Global inventory bounce remains in ernest. Imports rose substantially indicating that the consumer turned the corner right? Look a little deeper (something the media fails to do). They were primarily driven by an increase in oil and Autos. I really wouldn’t attribute us making another country richer by importing their oil as a positive at this point. As far as autos are concerned, was it organic or not? What very much touted stimulus was working its magic during that time? Cash for Clunkers! If anything this report shows me that the global imbalances continue. We are importing more than we export and that’s why the world has been full of exporters and one main consumer of the course of the last decade. This hasn’t changed.
Meanwhile a declining dollar is causing havoc for the worlds exporters.
Despite this news, the market is higher, maybe because it signals that the Fed will keep rates rock bottom for the foreseeable future. This is a fad that has persisted for months, but like all the other ones that didn’t include organic growth, it will expire….just look at Japan.