This article originally appeared Sept. 6, 2013, on Real Money. To read more content like this, + see inside Jim Cramer's multi-million dollar portfolio for FREE Click Here NOW.
How much pent-up demand is out there, really? Is that, perhaps, the missing ingredient behind the strength that we are seeing in this domestic consumer market?
There's no doubt in my mind that the real place to be this fourth quarter is in international companies. We have the possibility of real tailwinds coming out of Europe, now that we have multiple stronger economies and, yes, a stronger currency (all perfect timing given how lean our companies are over there). China's coming back in a way that is stealthy, through targeted infrastructure, and we can see that they have drawn down a lot steel, coal, iron and, as of some just released figures, copper. (We started buying back Joy Global (JOY - Get Report) yesterday because almost everyone has downgraded it and China is now opening a new coal plant every 10 days.)
But the biggest surprises this week have been all domestic. The car sale story, as talked about as it is, still doesn't get enough attention. I think that 17 million cars could be more like it. I don't like the housing theme and I think it hit a wall, but it isn't a wall that moves housing back to where it was. It just retains it as these levels.Mortgage rates are elevated, but we didn't see a big drop in applications this time. Some were trying to say that's because rates dropped down a tad. I would like to believe that, as a housing bear. But I think that what really happened is that rates stabilized and buyers came back. Plus, we got still one more great number from a retailer skewed to hard goods, with Costco (COST - Get Report) confirming, AGAIN, that the consumer's spending, but just not on apparel. I think this is a sign that we have simply misjudged the pent-up demand from the unemployed going to the employed. We just got it wrong. When these people come back into the workforce, they buy tangible goods. Or when they get a second job they go buy a new car. Rates for cars, by the way, haven't gone up. They've gone down, something that's as stupendous as the inversion where higher mortgages get lower interest rates.