Yet Another Weak Consumer Data Point

Not surprising in the least.....

Wednesday, April 23, 2008 - 2:05 PM PDT

Starbucks paints bleak Q2 picture

Puget Sound Business Journal (Seattle)

Citing a gloomy economic picture, Starbucks Corp. warned that its second-quarter earnings and fiscal 2008 will fall short of last year's earnings.

"The current economic environment is the weakest in our company's history, marked by lower home values, and rising costs for energy, food and other products that are directly impacting our customers," said Howard Schultz, chairman, president and CEO, in a statement.

The Seattle coffee giant (NASDAQ: SBUX) said it expects second-quarter earnings of 15 cents per share, down from 19 cents a year earlier and less than the 21 cents that analysts polled by Thomson Financial Network expect. For fiscal 2008, Starbucks said it expects earnings lower than the 87 cents reported in fiscal 2007, and less than 97 cents expected by analysts.

The company said it's been hit really hard in California and Florida markets, which account for 32 percent of its U.S. retail revenues. Those two states are "where consumers have been especially impacted by the effects of the downturn in the housing market," company officials said in a statement.

In after-hours trading Wednesday, shares in Starbucks had fallen more than 10 percent, dropping $1.85 to $16.

Now what I'm trying to wrap my head around is that we've had all these different instances showing that consumer demand is weakening and getting worse... yet we have anything beta related rallying (which mind you is mostly consumer oriented tech crap). The sad thing is that the next domino to fall is reduction in corporate spending not acceleration (which would have helped bolster this "Goldilocks" lunacy) we are heading for a depression and it is blatantly apparent the stock market is oblivious to this inevitability.