Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
Peloton 35% CRASH a Lesson of What Happens When One Over Pays for a Loss Making Growth Stock - 1st Dec 21
Stock Market Sentiment Speaks: I Fear For Retirees For The Next 20 Years - 1st Dec 21 t
Will the Anointed Finanical Experts Get It Wrong Again? - 1st Dec 21
Main Differences Between the UK and Canadian Gaming Markets - 1st Dec 21
Bitcoin Price TRIGGER for Accumulating Into Alt Coins for 2022 Price Explosion - 30th Nov 21
Omicron Covid Wave 4 Impact on Financial Markets - 30th Nov 21
Can You Hear It? That’s the Crowd Booing Gold’s Downturn - 30th Nov 21
Economic and Market Impacts of Omicron Strain Covid 4th Wave - 30th Nov 21
Stock Market Historical Trends Suggest A Strengthening Bullish Trend In December - 30th Nov 21
Crypto Market Analysis: What Trading Will Look Like in 2022 for Novice and Veteran Traders? - 30th Nov 21
Best Stocks for Investing to Profit form the Metaverse and Get Rich - 29th Nov 21
Should You Invest In Real Estate In 2021? - 29th Nov 21
Silver Long-term Trend Analysis - 28th Nov 21
Silver Mining Stocks Fundamentals - 28th Nov 21
Crude Oil Didn’t Like Thanksgiving Turkey This Year - 28th Nov 21
Sheffield First Snow Winter 2021 - Snowballs and Snowmen Fun - 28th Nov 21
Stock Market Investing LESSON - Buying Value - 27th Nov 21
Corsair MP600 NVME M.2 SSD 66% Performance Loss After 6 Months of Use - Benchmark Tests - 27th Nov 21
Stock Maket Trading Lesson - How to REALLY Trade Markets - 26th Nov 21
SILVER Price Trend Analysis - 26th Nov 21
Federal Reserve Asks Americans to Eat Soy “Meat” for Thanksgiving - 26th Nov 21
Is the S&P 500 Topping or Just Consolidating? - 26th Nov 21
Is a Bigger Drop in Gold Price Just Around the Corner? - 26th Nov 21
Financial Stocks ETF Sector XLF Pullback Sets Up A New $43.60 Upside Target - 26th Nov 21
A Couple of Things to Think About Before Buying Shares - 25th Nov 21
UK Best Fixed Rate Tariff Deal is to NOT FIX Gas and Electric Energy Tariffs During Winter 2021-22 - 25th Nov 21
Stock Market Begins it's Year End Seasonal Santa Rally - 24th Nov 21
How Silver Can Conquer $50+ in 2022 - 24th Nov 21
Stock Market Betting on Hawkish Fed - 24th Nov 21
Stock Market Elliott Wave Trend Forecast - 24th Nov 21
Your once-a-year All-Access Financial Markets Analysis Pass - 24th Nov 21
Did Zillow’s $300 million flop prove me wrong? - 24th Nov 21
Now Malaysian Drivers Renew Their Kurnia Car Insurance Online With - 24th Nov 21
Gold / Silver Ratio - 23rd Nov 21
Stock Market Sentiment Speaks: Can We Get To 5500SPX In 2022? But 4440SPX Comes First - 23rd Nov 21
A Month-to-month breakdown of how Much Money Individuals are Spending on Stocks - 23rd Nov 21
S&P 500: Rallying Tech Stocks vs. Plummeting Oil Stocks - 23rd Nov 21
Like the Latest Bond Flick, the US Dollar Has No Time to Die - 23rd Nov 21
Cannabis ETF MJ Basing & Volatility Patterns - 22nd Nov 21
The Most Important Lesson Learned from this COVID Pandemic - 22nd Nov 21
Dow Stock Market Trend Analysis - 22nd Nov 21

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Consumer Confidence and Stock Market Investor Sentiment Indicators

Stock-Markets / Stock Market Sentiment Aug 05, 2009 - 08:42 AM GMT

By: Richard_Shaw


Best Financial Markets Analysis ArticleThe broad consumer confidence index reported a decline below the 50% level on July 28. Let’s see how some other dimensions of confidence look.


In addition to reporting the drop in the consumer confidence index below 50%, the Conference Board reported a drop in the present situation index (a number in the 30’s), and a drop in the expectations index (a number in the 60’s).

The present looks bad and worse than recently; and the future looks somewhat positive, but not so much as recently.

Only a minority of CEOs feel the overall economic situation is improved over six months ago (fewer sense improvement in their own industries), however a small majority expect overall economic conditions to improve over the next six months (somewhat less than a majority have improvement expectations for their own industries).

CEOs should be more knowledgeable about their own industries than all industries, so their views of their own industries should probably be more reliable.  The difference between their industry view versus their global view may be an example of hope over reality.


Overall investor optimism about the next twelve months is up considerably from a November 2008 value of negative 47, and the March 2009 low of negative 64, but still poor at negative 3.

Investor optimism about personal portfolios over the next twelve months was a positive 13 in November 2008, a positive 6 in March of 2009, and stands at a positive 28 today.

This is the opposite of the CEO situation.  CEOs see greener grass in other industries, while investors are more confident of their personal portfolios than the aggregate portfolios of their investor brethren.  Is this also hope over reality?

Investors, while having slightly negative to moderately positive views about portfolios, have significantly negative views of the direction of the US economy over the next twelve months.  The economic view was at negative 60 in November 2008, negative 70 in March 2009 and at an improved negative 31 now.

In contrast to the Conference Board Consumer Confidence index which had been above 50 before the last report, the weekly Gallup Poll has shown the percentage of those polled believing the economy is improving at about 20% in January 2008, down toward 10% in July 2008, and back up to just below 20% before the October 2008 market crash.  The number rose from just below 20% in March 2009 to nearly 40% in May and June, but is back down to 34% now.

So the situation is better, but is not good.  That is not a good case for a bull market.


On a more global scale and with a longer-term view, Rasmussen finds that 49% of voters believe that the best days for the United States are in the past. Only 38% of voters believe that the best days for the US are in the future.  The remainder are not sure.

These data tend to support the idea of under-weighting the US in asset allocation models and over-weighting countries in the ascendant stage.

Back closer to the present with more a more specific question, 54% of Americans expect interest rates to be higher a year from now, up from 30% in April.

If and when rates rise, bonds will have some difficulty.  Before or as that time begins, it would be a good idea to shorten duration.

Only 25% of Americans believe the Obama stimulus package has aided the economy, and 31% say the stimulus package has hurt the economy, while 36% say the package has had no impact.  Presumably, 8% don’t have an opinion.  Compared to just after passage of the plan, fewer think positively; and about the same percentage think negatively; and more think there is no impact.

At best, the outcome is uncertain.  That is not solidly supportive of equities, and is probably an indication to over-weight bonds.

Not surprisingly, 50% of Republicans feel the plan has hurt the economy, but only 41% of Democrats feel the plan has helped the economy.

Fully 60% of voters oppose a second stimulus plan, while 27% believe a second stimulus plan is warranted.  In contrast, 51% if voters believe an across-the-board tax cut is the best tonic for the economy at this time.

More stimulus spending means more stimulus borrowing and higher taxes than even those contemplated now.  We tend to think that stimulus spending matched to higher taxes is not actually stimulative (basically +1 and -1 = zero).  Overall, we think more government stimulus with higher taxes (plus more government intervention in the business process) is negative for capital formation and investing generally — a long-term negative for growth and profits.


The favorable stock market expectations and even more favorable personal portfolio expectations don’t seem to line up well with views of the economy, interest rates, taxes and government stimulus plans.

Confidence improvements may warrant a better market, but improvement within negative parameters does not warrant persistently strong markets.

We have gone from a brush with near death to very sick, but are not yet healthy.

This is no time to become giddy, over committed or complacent.  Stay alert and use protective stops.

By Richard Shaw

Richard Shaw leads the QVM team as President of QVM Group. Richard has extensive investment industry experience including serving on the board of directors of two large investment management companies, including Aberdeen Asset Management (listed London Stock Exchange) and as a charter investor and director of Lending Tree ( download short professional profile ). He provides portfolio design and management services to individual and corporate clients. He also edits the QVM investment blog. His writings are generally republished by SeekingAlpha and Reuters and are linked to sites such as Kiplinger and Yahoo Finance and other sites. He is a 1970 graduate of Dartmouth College.

Copyright 2006-2009 by QVM Group LLC All rights reserved.

Disclaimer: The above is a matter of opinion and is not intended as investment advice. Information and analysis above are derived from sources and utilizing methods believed reliable, but we cannot accept responsibility for any trading losses you may incur as a result of this analysis. Do your own due diligence.

Richard Shaw Archive

© 2005-2019 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in