Consumers ‘do believe in the green shoot story’
This is the conclusion that Wachovia Chief Economist Mark Vitner draws from the very bullish consumer confidence number we have just seen. To fill you in on the details, the Conference Board said its Consumer Confidence Index leapt from a poor 40.8 reading in April to a less poor 54.9 reading for May. This was the highest reading in eight months. But, the present situation is terrible, 28.9. It is expectations that are through the roof with the reading jumping over 20 points from 51.0 to 72.3. That is a gargantuan one-month move.
Let’s remember that confidence does not translate into consumption, especially as most of the uptick here was in consumer expectations. Nevertheless, this has grabbed the market’s attention and U.S. stocks are up well over 2% as I write this. If you were wondering whether the powerful market rally from March has legs, this should come as proof that it does. The S&P 500 is now above its 20-day average trendline again.
I should caution that an uptick in expectations of this magnitude has a dark side. If the economic data disappoint in June, we could see a sharp selloff. That makes the June data and the early July earnings reports very crucial data points.
Source
The Conference Board Consumer Confidence Index™ Increases Sharply – Conference Board
“If you were wondering whether the powerful market rally from March has legs, this should come as proof that it does.”
No, not really. One of the main reasons that confidence rose is that the stock market is up. And then the stock market rises on the news…. doh!
You, and much of the business press, are trying way to hard to create reasons for a rebound out of very small beer.
Why you think this post is positive spin is beyond me. Clearly, the rally is way ahead of itself and poor data in June could mean a major market setback.
Because you made the completely spurious claim: “If you were wondering whether the powerful market rally from March has legs, this should come as proof that it does.”
It did nothing of the sort. That the market jumped on such simple-minded reasoning, on very low volume, would tend to illustrate how this rally has no legs, but has been built like a house of cards: a lot of thin data points, repeated and echoed, as support for ever greater supposition.
You don’t seem to grasp what the situation is, a massive deleveraging environment that will go on for years. The fact that a particular data stream ticks up for a month or two is not going to change the equation.
I guess that’s why this blog is called ‘Credit Writedowns,’ because I don’t seem to grasp what the situation is, a massive deleveraging environment that will go on for years. If you are going to critique my posts, at least write something that makes sense. I also suggest you read a few more posts on the site first.You might want to start here:https://pro.creditwritedowns.com/about
And just because we see a bear market rally with more upside potential, doesn’t mean that the rally is based on fundamentals or high volume. It is still a rally as anyone who is short will painfully tell you.