Desperation Shopping

I've been puzzled as to why corporate sales and earnings have been driving higher lately despite the massive unemployment and falling housing market in our country. Stocks have been rising with the expectation that sales (and more specifically consumer spending) will continue to accelerate. In fact, since my last post (calling for moving money out of stocks) the market has gone nowhere but up!

My asset allocation, conversely, has been quite defensive. I'm of the opinion that analysts are too optimistic about the recovery of the economy - V-shape, square-root shape . . . whatever you want to call it. It's a fact, though. Consumers are spending more, even with lower paying jobs (if jobs at all), flat to falling house prices and looming tax increases because of a huge national deficit.
I call it Desperation Shopping.

Here is a good article that may explain this dichotomy:

Mortgage Defaults May Be Driving Consumer Spending