No matter how many people ask him, and regardless of their angle or approach, Federal Reserve Chairman Ben Bernanke knows his story and is sticking to it. And yet for all the caution his "far too early to declare victory" mantra portends, the stock market has chosen to largely ignore it and has surged to levels not seen since 2008.
The most conspicuous counter-cautious rally can be seen within the riskier sectors, particularly those that are believed to be immune from a global slowdown, are domestically focused, and positioned to tap into an increasingly confident and gainfully employed U.S. consumer...or so the story goes.
Contrary to this meme, there are some investors who are actually worried by the U.S. market's odd ability to stand strong - and alone - in the face of increasing global weakness.
In fact, if it weren't for Apple's (AAPL) record results, fourth quarter profit growth for the S&P 500 would go from 6.1% to 3.0% Factset data shows. And similar ex-Apple stats will cloud the first quarter too, where profit growth at the maker of iProducts has put estimates at break-even, instead of a 1.6% decline without it.
"Apple is just a juggernaut," says David Steinberg, founder of DLS Capital in the attached video. "But you need to take that and set it aside because it's not representative of the average consumer."
Steinberg's world view is much more Bernanke-esque in that he is focusing on what he sees as an average consumer who ''is dealing with an over-leveraged balance sheet, their house is down and they're worried about their job, they're watching what they're spending and not seeing a lot of wage increases."
And yet, the latest income and spending data shows the legendary U.S. consumer was back in a buying mood last month, when purchasing growth outpaced wage growth by a 4 to 1 margin.
As he sees, it's time acknowledge strip mall vacancy rates, accept that auto sales are still running about a million units below that ten-year average and concede that big ticket purchases are restrained. If you believe all that, then you too will want to lighten up on your exposure to the U.S. consumer.
If you're still bent on finding some sort of play on the consumer, Steinberg suggests looking overseas, where "emerging market consumers are getting wealthier per capita" and many of their governments - like China - are creditors to the developed world.
- David Steinberg