Is the Consumer Bouncing Back?

Is the Consumer Bouncing Back?
Photo: Johner | Johner Images | Getty Images

What's up with the consumer? September Retail sales, up 1.1 percent, were much better than expected, and August was revised upward.

Not a single major category showed a decline — not motor vehicles, electronics, gas stations, sporting goods, clothing, personal care. (Read more: Retail Posts Rise on Boost From Surging Gas, Auto Sales )

Add that to Michigan Consumer Sentiment, out last Friday, also much stronger than expected, at the highest level since 2007.

Next up for more surprises: housing. September Housing Starts and Building Permits are out Wednesday. Single family starts in August was at the highest levels since April 2010 (when the homebuyer tax credit gave a boost to housing). Time for multifamily to back off, single family to move up.

(Read more: Sold! America Is Flipping Out Again Over Real Estate )

UBS on housing this morning: "Our channel checks suggest that there might be some upside to our economist's forecast as traffic patterns and buying conditions are still up year over year..."

And both Wells Fargo and JPMorgan made bullish comments in their earnings releases last week.

Elsewhere: this is a selloff? For all the worries, the Dow Industrials is less than two percent off the 4-year highs, and has never dropped more than three percent.

Earnings : betting against the naysayers. I know everyone is talking about earnings warnings, and Q3 earnings turning negative, but here's my bet:

1) when it's all tallied up in a few weeks, Q3 earnings will be UP slightly, not down, and

2) Q3 will be the earnings trough for the S&P 500.

(Read more: Earnings Look Better So Far, but Market May Not Care )

Why? Because the one thing I have seen in my 15 years covering earnings is that when the outlook gets murky, CEOs get very conservative in their guidance. They get more conservative than the analysts. And then they beat.

—By CNBC's Bob Pisani

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