Last week, shares of Saks surged after Diego Della Valle, an Italian investor, raised his stake in the U.S. luxury handbag-maker to 19 percent.
Still, some investors have their doubts.
“Although Merrill’s fundamental argument is strong, it fails to take into account a change in the mentality of the American consumer that stretches throughout all income brackets,” said Jim Iuorio of TJM Institutional Services. “The lasting effects of this recession will be fear and frugality. Although the balance sheet of the wealthy has been built back up by the stock market’s rise, the memory of wealth destruction that occurred in the fall of 2008 should last for a long time.”
For middle-income earners, the spending forecast does not look too bright. Seventy-one percent of those in this bracket intend to spend less this holiday season relative to last year, according to a survey by First Command Financial Services quoted in a report from Gluskin Sheff.
“To think, we are viewed as being bears on the economy,” said David Rosenberg, chief economist and strategist at Gluskin Sheff, in the note. “The consumer is about to take on the role of Scrooge.”
Merrill agrees that overall consumer spending will continue to be weak, but believes the wealthy could be one pocket of strength.Page 2 of 3 | Prev Page | Next Page