Suitably Flip

Consumer Confidence Highest Since Pre-9/11

The Conference Board published their February reading of the Consumer Confidence Index today, which clocked in at a hearty 112.5.  The last time the index was this high was 5 and a half years ago, in August 2001.

Upbeat consumers outnumbered fussbudgets by more than 2 to 1.  What's more, the percentage of people having difficulty finding jobs also hit its lowest level since 9/11.

Still, no amount of consumer jauntiness was going to keep Wall Street happy today.  The dramatic fall-off in durable goods orders (down 7.8%, excluding defense spending), combined with a single-session cratering of Chinese stocks put investors in a decidedly glum mood, perhaps compounding Alan Greenspan's comments yesterday about the possibility of an economic recession on the horizon (even if the Associated Press did egregiously mischaracterize Greenspan's fairly innocuous comments).

Despite the AP's overblown economic fearmongering and ignoring the fact that the durable goods number is a notoriously volatile one (skewed this month by aircraft orders), if this confluence of catalysts is what the market needed to inspire a correction, so be it.  Stocks have been somewhat troublingly uni-directional since last summer.  Since July of 2006, the Dow has climbed nearly 18% without once enjoying the purifying fires of even a 2% correction.

Maybe it's time.

After this extended and largely unbroken run-up, a correction of 5% or so might give investors, suspicious of the seemingly tireless bull, a chance to gather themselves, regain their composure, and join consumers in a little forward-looking jauntiness.  After all, consumer spending (which accounts for the large majority of economic activity) is strong, corporate earnings are strong, productivity is high, and the job market has managed to stay hot without triggering inflation.  All the domestic economic stars remain aligned, so I'm not overly concerned about the macro picture.  If the equity markets need a breather, they've probably earned it.

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Consumer Confidence Highest Since Pre-9/11

The Conference Board published their February reading of the Consumer Confidence Index today, which clocked in at a hearty 112.5.  The last time the index was this high was 5 and a half years ago, in August 2001.

Upbeat consumers outnumbered fussbudgets by more than 2 to 1.  What's more, the percentage of people having difficulty finding jobs also hit its lowest level since 9/11.

Still, no amount of consumer jauntiness was going to keep Wall Street happy today.  The dramatic fall-off in durable goods orders (down 7.8%, excluding defense spending), combined with a single-session cratering of Chinese stocks put investors in a decidedly glum mood, perhaps compounding Alan Greenspan's comments yesterday about the possibility of an economic recession on the horizon (even if the Associated Press did egregiously mischaracterize Greenspan's fairly innocuous comments).

Despite the AP's overblown economic fearmongering and ignoring the fact that the durable goods number is a notoriously volatile one (skewed this month by aircraft orders), if this confluence of catalysts is what the market needed to inspire a correction, so be it.  Stocks have been somewhat troublingly uni-directional since last summer.  Since July of 2006, the Dow has climbed nearly 18% without once enjoying the purifying fires of even a 2% correction.

Maybe it's time.

After this extended and largely unbroken run-up, a correction of 5% or so might give investors, suspicious of the seemingly tireless bull, a chance to gather themselves, regain their composure, and join consumers in a little forward-looking jauntiness.  After all, consumer spending (which accounts for the large majority of economic activity) is strong, corporate earnings are strong, productivity is high, and the job market has managed to stay hot without triggering inflation.  All the domestic economic stars remain aligned, so I'm not overly concerned about the macro picture.  If the equity markets need a breather, they've probably earned it.