Despite rising gas prices, rising mortgage rates, slowing income growth and the rise of ‘low-quality’ part-time jobs, ‘con’sumer ’con’fidence ’con’tinues to rise to post-recession highs. However, as Citi’s FX Technicals group notes, for the 3rd time in the last 17 year period we may be looking at a 4-year-4-month rise in consumer confidence before a turn lower again; and in spite of the Fed’s rosy forecasts (and the market’s expectations), we should be careful being too quick to believe that the sluggish economic dynamic that has ‘dogged us’ for the last 6 years is yet fully behind us.
Via Citi FX Technicals,
In our chart of the week we start with what we think is one of the most forward looking and influential Techamental charts we look at – CONsumer CONfidence.
– It has been pivotal in the last 17 years or so in giving a guide to the overall backdrop when it comes to the US economy and financial markets. In addition it has been a leading guide for equity markets (In 2000 and 20007 in particular.)
– In addition we will look at some of our other favored Techamental indicators and market charts
– Our conclusion: Be careful about being too quick to believe that the sluggish economic dynamic that has “dogged us” for the last 6 years is yet fully behind us. If we are correct then the Fed is likely going to have to agonize in the 4th quarter whether to stick with its implicit guidance and taper and even if they go ahead with that decision they may find themselves having to reverse it later.
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