Before we join the stampede to buy the Dow Industrials back up to 14000, let us consider what stock market investors would be contriving to ignore. Here's a short list of nettlesome realities from David Rosenberg, Merrill's Lynch's chief U.S. economist: 'The American consumer, 70% of US GDP and 20% of global GDP, is losing its resilience. Auto sales have fallen for a record seven months in a row and slipped to a 9-year low of 15.2 million units (at an annual rate) in July and there is no sign of pickup in the first half of August. Consumer spending in real terms has stagnated over the February-July period, which is a stretch of weakness not seen since the double-dip of 2002. Chain store sales were flat sequentially last month and fully 62% of the retailing universe missed their already-lowered sales targets in July. While employment growth in the nonfarm payroll survey has indeed stayed positive, though moderating, the Household survey has actually flagged a stagnant labor market since February and this measure is far more reliable at turning points.' Rosenberg says any Fed easing at this point will be pushing on a string, and we find that hard to refute. Think about it. In an economy that is 70% consumption, any Fed stimulus boils down to one goal: getting consumers to spend. But how, now that the 'wealth effect' of soaring home prices has moved very sharply in the opposite direction? Indeed, if you are a typical homeowner, your property has lost about 7 percent of its values in the last twelve months alone. If the house appraised for $350,000 the last time you refinanced, that means it would currently fetch only $325,000 on the market. You would be 'under water,' so to speak, and it would take a price
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