Wall Street continues to tell us that the hot shot consumer is continuing their strategy of beg, borrow, and steal to fuel its spending habits. I say, not so fast!
Bill gross from Pimco was on this morning, and he said he expects housing prices to drop another 20% over the next year. Real estate guru, Ken Heebner, said " U.S. home prices may plunge as much as 20 percent because of rising defaults on riskier mortgages."
Heebner manages the top-performing real-estate fund, CGM Realty which has gained on average of 20 percent a year in the past 10 years.
If I were a betting man, I would seriously look at shorting some consumer descretionary stocks and ETF's that are trading at or near their 52 week high's. Here are a few that made the list yesterday;
AEROPOSTALE (ARO)
RALPH LAUREN POLO (RL)
ROSS STORES (ROST)
RADIOSHACK (RSH)
PS CONSUMER DESCRETIONARY (PEZ)
SPDR CONSUMER DESCRETIONARY (XLY)
RETAIL HOLDRS (RTH)
VANGUARD CONSUMER DESCRETIONARY (VCR)
I know, I know, the stock market has been climbing a wall of worry, the housing data is not as bad as expected, the inflation we are feeling is just a mirage, and goldilocks is in town.
Okay, we can ignore Heeber and Gross, or we can use our own minds and conclude;
-Housing starts are at a 5 year low, and home prices are in decline.
-The new jobs created are not as good as the millions that have been outsourced.
-U.S. manufacturing is nearly dead.
-Gasoline prices are near their highs.
-Consumers are tapped out, have no savings, and are getting deeper in debt.
-Banks have closed the consumer ATM machines-home equity extractions on inflated and bogus values.
-The higher prices you are paying for food, energy, goods & services is for real and not imagined.
