A Strong And Confident Consumer Doesn't Mean Big Bucks Will Be Spent

The U.S. election is over with and the Dow Jones Industrial Average is flirting with the 20,000 mark. Gas prices remain relatively low compared to what they were at a few years ago. With that said, the consumer must be in a confident mood and spending the big bucks this holiday season. Right?

Not so fast, at least according to Gadfly's Shelly Banjo.

Banjo argued that while the consumer remains strong and confident, the sentiment is unlikely to be reflected in retail sales and consumer-spending.

In fact, the U.S. government released data on Thursday that showed consumer spending during November (which includes Black Friday) decelerated for the second straight month. The announcement resulted in retail stocks suffering their worst day in months. In fact, the exchange-traded fund most exposed to retailers, the SPDR S&P Retail (ETF) XRT is up just 4 percent since the start of the year, which is less than half of the S&P 500's approximate 10 percent return.

Also not helping the case for retailers is the fact that personal income declined for the month for the first time since October 2013.

Meanwhile, pricing in footwear and apparel has decelerated materially, which doesn't instill confidence in retail investors.

"There's a clear bifurcation between measures of sentiment — or how people feel — and hard measures of economic activity — or what's actually happening," Banjo concluded.