The ABC News Consumer Comfort Index was described by its sponsor as per the title. Here are some excerpts from today's weekly update:
With five days ’til Halloween and seven before the election, consumer confidence is looking like a horror show for the party in power.
The ABC News Consumer Comfort Index stands at -47 on its scale from +100 to -100, 7 points from its low in nearly 25 years of weekly polls. It’s been this bad just twice in the week before an election: in 2008 and 1992, both years the Republicans were turfed out of the White House.
Now it looks like the incumbent Democrats’ turn to suffer. As in the past, economic discontent is fueling broad dissatisfaction with the status quo, and it’s aimed particularly at the party calling the shots in Washington.
Meanwhile, the one bit of consumer polling I have seen that is an upside change is Gallup's daily polling of hiring-not hiring, which has broken out to what I believe is a multi-month high of +15. Let us see if that can be sustained or is a blip. (Other parameters such as discretionary spending were depressed as usual in the same poll, however.)
In other news, Bill Gross has turned bearish on U. S. bonds. Probably time to buy again.
Copyright (C) Long Lake LLC 2010
Showing posts with label ABC News Consumer Comfort Index. Show all posts
Showing posts with label ABC News Consumer Comfort Index. Show all posts
Wednesday, October 27, 2010
Thursday, October 7, 2010
Same Old No-Growth Surveys and the Treasury Market
Discover(R) card's Rasmussen-conducted U. S. Spending Monitor came out with its September survey. Here's the intro:
Consumers' views about the economy were unchanged from August to September, but the number of consumers feeling that their personal finances are getting worse rose for the sixth consecutive month and reached a nine-month high, according to the Discover U.S. Spending Monitor.
The Monitor, a poll of 8,200 consumers tracking consumer confidence and spending intentions on a daily basis, held steady in September, dropping just 0.5 points to 85.7. Overall, 57 percent of consumers rated the economy as poor, unchanged from August and 51 percent felt economic conditions were getting worse, just 1 point higher than August. But the number of consumers who felt their personal finances were getting worse rose for the sixth straight month to 49 percent. In April, just 43 percent felt their finances were getting worse. Economic and financial uncertainty has more consumers planning to trim discretionary spending in the month ahead.
This comports with the ongoing Gallup.com's daily reports on how people's individual spending patterns are, and on this week's ABC News Consumer Comfort Index, which reported:
A gain of sorts in optimism about the economy’s future isn’t reflected in views of current conditions: the ABC News Consumer Comfort Index is as bad as ever, indeed its lowest this week in the past two months.
The weekly CCI, produced for ABC News by Langer Research Associates, stands at -47 on its scale of +100 to -100, compared with its 24-year average of -13. After flirting with the low-40s, it’s back within sight of -50, its unofficial death zone.
The data continue to be consistent with the contained depression with a cyclical upturn scenario, otherwise known as the Japan scenario. For now, with the fall in the 2-5 year Treasury yields to all-time lows and in the 10-year yield to multi-decade lows except for a brief period in Dec. 2008-Jan. 2009, the financial world is holding together. There are no signs that the Grecian scenario of lenders pulling the plug on the U. S. is in the cards for now.
The absolute gap in yield between the 10 year and the 30 year Treasuries is at or near record levels, and perhaps more relevant is the ratio between the two, which at over 1.5:1 may have soared well into record territory.
The market is taking the rational approach, implicitly forecasting a return to historically normal interest rates in years 11-30. The flip side of that is that buyers of 10 year bonds are giving up the certainty of higher current return every year for the next 10 years for the possibility that in the longer term, sufficiently good investment returns will be available and will be chosen to more than make up for the higher current income.
Increasingly I am tacking to the long end.
Copyright (C) Long Lake LLC 2010
Consumers' views about the economy were unchanged from August to September, but the number of consumers feeling that their personal finances are getting worse rose for the sixth consecutive month and reached a nine-month high, according to the Discover U.S. Spending Monitor.
The Monitor, a poll of 8,200 consumers tracking consumer confidence and spending intentions on a daily basis, held steady in September, dropping just 0.5 points to 85.7. Overall, 57 percent of consumers rated the economy as poor, unchanged from August and 51 percent felt economic conditions were getting worse, just 1 point higher than August. But the number of consumers who felt their personal finances were getting worse rose for the sixth straight month to 49 percent. In April, just 43 percent felt their finances were getting worse. Economic and financial uncertainty has more consumers planning to trim discretionary spending in the month ahead.
This comports with the ongoing Gallup.com's daily reports on how people's individual spending patterns are, and on this week's ABC News Consumer Comfort Index, which reported:
A gain of sorts in optimism about the economy’s future isn’t reflected in views of current conditions: the ABC News Consumer Comfort Index is as bad as ever, indeed its lowest this week in the past two months.
The weekly CCI, produced for ABC News by Langer Research Associates, stands at -47 on its scale of +100 to -100, compared with its 24-year average of -13. After flirting with the low-40s, it’s back within sight of -50, its unofficial death zone.
The data continue to be consistent with the contained depression with a cyclical upturn scenario, otherwise known as the Japan scenario. For now, with the fall in the 2-5 year Treasury yields to all-time lows and in the 10-year yield to multi-decade lows except for a brief period in Dec. 2008-Jan. 2009, the financial world is holding together. There are no signs that the Grecian scenario of lenders pulling the plug on the U. S. is in the cards for now.
The absolute gap in yield between the 10 year and the 30 year Treasuries is at or near record levels, and perhaps more relevant is the ratio between the two, which at over 1.5:1 may have soared well into record territory.
The market is taking the rational approach, implicitly forecasting a return to historically normal interest rates in years 11-30. The flip side of that is that buyers of 10 year bonds are giving up the certainty of higher current return every year for the next 10 years for the possibility that in the longer term, sufficiently good investment returns will be available and will be chosen to more than make up for the higher current income.
Increasingly I am tacking to the long end.
Copyright (C) Long Lake LLC 2010
Wednesday, September 15, 2010
Irrational Optimism about Housing among Experts; Continued Consumer Pessimism
ABC News reports Economic Pessimism at a Yearlong High:
For the third straight month significantly more Americans say the economy is getting worse, 38 percent, than say it’s getting better, 22 percent. The rest, 37 percent, say it’s staying the same, which for nearly all of them means bad.
The gap between pessimists and optimists has grown from 6 points in July and 11 points in August to 16 points now, its biggest since September 2009. Economic optimism is at its low going even further back, to March 2009.
Stock prices are of course much higher than in March 2009. Contrarians who want to "buy" pessimism should realize that with mutual fund cash at or near a modern record low as a % of assets under management, facts do not support that idea that the stock market is especially either oversold.
There is however some optimism, and some of it may be misplaced.
Some of the optimists who should be realists are real estate experts who should know better. Bloomberg.com reports U.S. Home Prices Face Three-Year Drop as Supply Gains and describes a hold-on-and-wait viewpoint from two interesting players:
Brandi Miner, director of marketing for the Georgia Association of Realtors, is holding back on selling her one- bedroom condominium in Atlanta’s Buckhead district because she has an underwater mortgage. She paid $155,000 for the property in 2005.
“I’m stuck,” Miner said. “I thought it was a stepping stone to a house.”
Miner pays about $1,100 a month for her mortgage plus $225 in condo dues, a higher price than she would spend for a three- bedroom house in a good Atlanta-area neighborhood at today’s prices, she said. Selling now would cost her $10,000 to $15,000, Miner estimated.
“I’m not $200,000 in the hole, thank God,” she said. “But the quarter of the country that’s underwater -- that’s me.”
Ms. Miner would not "cost" her a specific amount if she sold now, other than closing and moving costs. Her home has lost value. Another person who appears to have an optimistic point of view about prices bouncing back is even more surprising:
The slide in values and record-low interest rates may offer some bargains for property hunters. Prices have returned to historically affordable levels, said Karl Case, professor emeritus of economics at Wellesley College in Wellesley, Massachusetts, and co-creator of the S&P/Case-Shiller index. He estimates a bottom for prices in six months. . .
Case is an example of a homeowner waiting to sell because of low demand. He’s seeking to sell the A-frame on 15 acres near Cooperstown, New York, that he bought for $190,000 in 2005.
“I want to keep it if I can’t get what I want,” he said. “It’s a terrific little getaway and I’m not going to give it away.”
In the meantime, all the Fed and Federal programs (including bank forbearance) have kept housing prices above their equilibrium price. Waiting for any specific property to come back to the price you like is quite a gamble. It's like buying Oracle at 30 but it's now 2002, not 1999 and it's and 10, or 20, or whatever. It may never come back.
I am looking for housing to play the role that tech played for years following the tech bust: a deflationary or relatively disinflationary force. I also expect short-term interest rates to stay below the rate of consumer price rises for some time. This could be the 1940s and early 1950s again, with very low interest rates due both to public fear and active purchase of Treasury debt by the Fed coupled with high rate of price rises; let us hope no worse war comes along.
Under this scenario, classic inflation hedges beat general common stocks, and Treasuries are trading vehicles; and cash is trash until and unless the U. S. actually enters a sustained period of generalized price decreases.
Copyright (C) Long Lake LLC 2010
For the third straight month significantly more Americans say the economy is getting worse, 38 percent, than say it’s getting better, 22 percent. The rest, 37 percent, say it’s staying the same, which for nearly all of them means bad.
The gap between pessimists and optimists has grown from 6 points in July and 11 points in August to 16 points now, its biggest since September 2009. Economic optimism is at its low going even further back, to March 2009.
Stock prices are of course much higher than in March 2009. Contrarians who want to "buy" pessimism should realize that with mutual fund cash at or near a modern record low as a % of assets under management, facts do not support that idea that the stock market is especially either oversold.
There is however some optimism, and some of it may be misplaced.
Some of the optimists who should be realists are real estate experts who should know better. Bloomberg.com reports U.S. Home Prices Face Three-Year Drop as Supply Gains and describes a hold-on-and-wait viewpoint from two interesting players:
Brandi Miner, director of marketing for the Georgia Association of Realtors, is holding back on selling her one- bedroom condominium in Atlanta’s Buckhead district because she has an underwater mortgage. She paid $155,000 for the property in 2005.
“I’m stuck,” Miner said. “I thought it was a stepping stone to a house.”
Miner pays about $1,100 a month for her mortgage plus $225 in condo dues, a higher price than she would spend for a three- bedroom house in a good Atlanta-area neighborhood at today’s prices, she said. Selling now would cost her $10,000 to $15,000, Miner estimated.
“I’m not $200,000 in the hole, thank God,” she said. “But the quarter of the country that’s underwater -- that’s me.”
Ms. Miner would not "cost" her a specific amount if she sold now, other than closing and moving costs. Her home has lost value. Another person who appears to have an optimistic point of view about prices bouncing back is even more surprising:
The slide in values and record-low interest rates may offer some bargains for property hunters. Prices have returned to historically affordable levels, said Karl Case, professor emeritus of economics at Wellesley College in Wellesley, Massachusetts, and co-creator of the S&P/Case-Shiller index. He estimates a bottom for prices in six months. . .
Case is an example of a homeowner waiting to sell because of low demand. He’s seeking to sell the A-frame on 15 acres near Cooperstown, New York, that he bought for $190,000 in 2005.
“I want to keep it if I can’t get what I want,” he said. “It’s a terrific little getaway and I’m not going to give it away.”
In the meantime, all the Fed and Federal programs (including bank forbearance) have kept housing prices above their equilibrium price. Waiting for any specific property to come back to the price you like is quite a gamble. It's like buying Oracle at 30 but it's now 2002, not 1999 and it's and 10, or 20, or whatever. It may never come back.
I am looking for housing to play the role that tech played for years following the tech bust: a deflationary or relatively disinflationary force. I also expect short-term interest rates to stay below the rate of consumer price rises for some time. This could be the 1940s and early 1950s again, with very low interest rates due both to public fear and active purchase of Treasury debt by the Fed coupled with high rate of price rises; let us hope no worse war comes along.
Under this scenario, classic inflation hedges beat general common stocks, and Treasuries are trading vehicles; and cash is trash until and unless the U. S. actually enters a sustained period of generalized price decreases.
Copyright (C) Long Lake LLC 2010
Thursday, August 5, 2010
The Death Zone
This week's title of the ABC News Consumer Comfort Index is not encouraging: Consumer Confidence: Into the Death Zone. Here are excerpts:
Consumer confidence matched its low for the year this week, with the ABC News Consumer Comfort Index extending a steep 9-point, six-week drop from what had been its 2010 high.
The weekly index, based on Americans’ views of the national economy, the buying climate and their personal finances, stands at -50 on its scale of +100 to -100, just 4 points from its lowest on record in nearly 25 years of weekly polls, set in December 2008 and January 2009.
Underscoring its current deep weakness, the CCI has been -50 or lower just 27 times in 1,284 weekly polls – all but one of them since August 2008. (The other, February 1992.) It's in effect the death zone for consumer sentiment.
The CCI has been this low twice previously this year, in February and April, then advanced through late June before turning back down. Compare -50 to its 24-year average, -13.
It is a commonplace to point to other consumer and small business data that sadly all point to the same result: big company profits are high on the back of cost-cutting and perhaps good demand from other than the U. S. or Western Europe.
With oil prices now above $80 per barrel and housing on its backside, the Ins in Washington have to be sweating, no matter where they are this summer. After all, they stimulated! But it's looking more and more that the public is agreeing with the view consistently held at this blog that is was "stimulus" rather than real stimulus. And the Fed's money-printing stayed too much within the semi-hermetically sealed financial system, pushing up asset prices much more than the real economy.
Unfortunately, this is not 1979-80, where new ideas and policies were afoot. It is certain that the Republicrats will emerge victorious in the November elections. Or perhaps it's not so certain: perhaps it will be the Depublicans. In other words, the Establishment will win again, and the Bushbama Continuity of government-Big Finance working together to prop up asset values rather than focusing on allowing the real economy to work things out with a minimum of government intervention will likely continue. At least until the next major crisis.
In any case, the view here is that since the only bubble is that price to earnings of cash, which the authorities promise will remain in bubble territory indefinitely, the other trends that are extant are likely to stay extant. These include uptrends in gold and meandering in stocks, with risks tilted to the downside for the latter; and a counter-intuitive emerging bubble in increasingly longer-dated Treasuries.
Of these assets, the only one that I personally have any real confidence in is gold, and this is sad, because I have never been a gold bug. The devil made me do it!
Copyright Long Lake LLC 2010
Consumer confidence matched its low for the year this week, with the ABC News Consumer Comfort Index extending a steep 9-point, six-week drop from what had been its 2010 high.
The weekly index, based on Americans’ views of the national economy, the buying climate and their personal finances, stands at -50 on its scale of +100 to -100, just 4 points from its lowest on record in nearly 25 years of weekly polls, set in December 2008 and January 2009.
Underscoring its current deep weakness, the CCI has been -50 or lower just 27 times in 1,284 weekly polls – all but one of them since August 2008. (The other, February 1992.) It's in effect the death zone for consumer sentiment.
The CCI has been this low twice previously this year, in February and April, then advanced through late June before turning back down. Compare -50 to its 24-year average, -13.
It is a commonplace to point to other consumer and small business data that sadly all point to the same result: big company profits are high on the back of cost-cutting and perhaps good demand from other than the U. S. or Western Europe.
With oil prices now above $80 per barrel and housing on its backside, the Ins in Washington have to be sweating, no matter where they are this summer. After all, they stimulated! But it's looking more and more that the public is agreeing with the view consistently held at this blog that is was "stimulus" rather than real stimulus. And the Fed's money-printing stayed too much within the semi-hermetically sealed financial system, pushing up asset prices much more than the real economy.
Unfortunately, this is not 1979-80, where new ideas and policies were afoot. It is certain that the Republicrats will emerge victorious in the November elections. Or perhaps it's not so certain: perhaps it will be the Depublicans. In other words, the Establishment will win again, and the Bushbama Continuity of government-Big Finance working together to prop up asset values rather than focusing on allowing the real economy to work things out with a minimum of government intervention will likely continue. At least until the next major crisis.
In any case, the view here is that since the only bubble is that price to earnings of cash, which the authorities promise will remain in bubble territory indefinitely, the other trends that are extant are likely to stay extant. These include uptrends in gold and meandering in stocks, with risks tilted to the downside for the latter; and a counter-intuitive emerging bubble in increasingly longer-dated Treasuries.
Of these assets, the only one that I personally have any real confidence in is gold, and this is sad, because I have never been a gold bug. The devil made me do it!
Copyright Long Lake LLC 2010
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