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Chart Of The Day: Confidence Waning!

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    August 27, 2012

    On Friday morning my friend Tyler Durden posted a chart showing the Bloomberg Consumer Confidence index versus the S&P 500.  That poll showed a continued drop in consumer comfort to -47.4 reading.  Consumer confidence and sentiment on most all measures remain mired at recessionary levels which has been reflected in the sub-par economic growth rate since the last recession.

    The Bloomberg Consumer Comfort index fell a steep 3.0 points in the August 19 week for the sixth decline in a row and the lowest reading since December. The assessment of the economy declined 1.7 points to -77.3 which is at its lowest level since January.  Personal finances fell 4.8 points to -15.9 and is at its lowest level since November.  The very weak readings for personal finances do not point to future increases in discretionary spending which is a big negative for retailers where many have already missed earnings and revenue numbers and given weak future outlooks even at the lowest end of the retail scale.  The buying climate reading was down 2.5 points to -48.9 for the lowest reading since January.

    The Rasmussen indexes on the Consumer, Investor and Employment likewise have all declined in like fashion over the past several months as the market has remain detached from the underlying fundamental and economic realities in “hopes” that the promises of further QE will be fulfilled.  (See here for why this not likely the case soon.)

    The chart of the day shows the S&P 500 compared to the Rasmussen polls and the Bloomberg Consumer Comfort Index.  As you will see these indexes tend to lead the overall market by a couple of months.


    The question is simply either the market is soon to come to grips with the underlying realities of the economy and fundamentals or, as Irving Fisher once stated, “stocks have now reached a permanently high plateau.”   Are the indexes once again predicting a market top?  That is for you to decide.


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    Images: via Flickr (licence attribution)

    About The Author

    Lance Roberts – Host of Streettalk Live

    lance robertsAfter having been in the investing world for more than 25 years from private banking and investment management to private and venture capital; Lance has pretty much “been there and done that” at one point or another. His common sense approach has appealed to audiences for over a decade and continues to grow each and every week.

    Lance is also the Chief Editor of the X-Report, a weekly subscriber based-newsletter that is distributed nationwide. The newsletter covers economic, political and market topics as they relate to the management portfolios. A daily financial blog, audio and video’s also keep members informed of the day’s events and how it impacts your money.

    Lance’s investment strategies and knowledge have been featured on Fox 26, CNBC, Fox Business News and Fox News. He has been quoted by a litany of publications from the Wall Street Journal, Reuters, The Washington Post all the way to TheStreet.com as well as on several of the nation’s biggest financial blogs such as the Pragmatic Capitalist, Zero Hedge and Seeking Alpha.