Consumer Confidence Confidence?
May 26th, 2009 Posted in UncategorizedThe headline economic indicator of the day today, Tuesday, May 26, was the Consumer Confidence number. It came out as follows:
"The Conference Board Consumer Confidence Index™, which had improved considerably in April, posted another large gain in May. The Index now stands at 54.9 (1985=100), up from 40.8 in April. The Present Situation Index increased to 28.9 from 25.5 last month. The Expectations Index rose to 72.3 from 51.0 in April. The Consumer Confidence Survey™ is based on a representative sample of 5,000 U.S. households. The cutoff date for May's preliminary results was May 19th."
Headline-wise, the future looks brighter. The perception of relatively better times ahead is gaining traction, per the Confidence Board's survey.
Per my BBQ survey, I'm not so sure. I haven't trademarked my BBQ survey yet, but I am thinking about it as I think it is a good indicator of the local confidence level. The BBQ survey consists of my personal conversations with friends and family, and new acquaintances, around the Weber BBQ during weekend grilling parties and get-togethers.
Within these groups, there is a pronounced uptic in the number of unemployed or under-employed throughout many different lines of work -- construction, service, import/export industries, etc. Also, there has been at least a report or two of either wage freezes or decreases from some in the same group, concessions forced upon them in order to stay employed.
While it's nice that there appears to be light at the end of the tunnel, it really seems to me that the consumer that exits the tunnel will look markedly different than the one that entered the tunnel. I imagine that a percentage of the workforce will in the future carry on, or fall back to, the same spending habits as before the erosion in the US economy. However, I think that percentage will be fairly small compared to the number who come out of this having changed their habits and ideas on how debt (credit cards, home equity loans, etc.) and herd-mentality speculation (real estate, commodities, etc.) can deal a crushing blow. Or I guess that I at least hope that the average US consumer learns from what is occuring.
As I post this comment, the SP500 futures are +18.00 on the day, and the Dow futures are +173 points. The Confidence numbers are definitely boosting the market morale. The market is also aided higher, so far, by a dollar that had not returned to decline.
The 200 day SMA, per my chartwork, comes in at 924.30 for the June '09 SP500 futures. A test of that is feasible. A rally and close above that level is the formula for a push to 951.00. A rally and failure to close above it is a formula for a downside objective of 889.00, then 869.00.
Contact me if you have any questions/comments.
Bob // 1.800.388.0998 // 1.312.987.2053