Economic statistics seem to be confirming the suspicion many have had that the “economic recovery” was merely a reprieve from a drawn-out process of deleveraging and structural changes – a much needed process after decades of ever increasing consumer spending on the back of easy credit and rising asset prices. This reprieve was created by stimulative measures taken by the government and the Federal Reserve, who now both seem low on ammunition.
Among many consumer cyclical stocks that look vulnerable is Starwood Hotels & Resorts Worldwide Inc. (HOT). This company touts an inexplicably high valuation and I believe another contraction in consumer spending will provide the catalyst to take its stock price down significantly. Read the rest of this entry »