Optimism Blooms

There are lots of ways to measure Main Street sentiment. One of the best ways is the Conference Board reading on consumer confidence.  The index was largely drifting this year until the last couple of months where it’s begun listing off.  Tuesday’s reading of 104.1 is the highest since August 2007.

The move was driven by a surge in present conditions, which lends credence to assumptions that wages are finally on the move.  Moreover, there is a greater sense that jobs are becoming more available.

The lone red flag in the report was the sharp decline in response to a ‘good’ time to start a business: 27.4 from 30.3.  Still, the report was super impressive as it not only put the brakes on a serious slide, but it also allowed equities to decouple from oil, which slumped on the disappointment of another missed chance for the Organization of the Petroleum Exporting Countries (OPEC) to curb production.

Technology stocks rocked Tuesday as lots of money came out of utilities. The Utilities Select Sector SPDR (XLU) is still up 17% this year, underscoring the anxiety that’s clouded 2016.

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Despite the move in stocks Tuesday, the yields on the ten-year slumped again as global investors continue to fret over concerns over European banks. 

In light of the presidential debate and outside pressure for the Fed to hike rates, there’s no way it’s going to happen with banking anxieties and the recent spate of sub-par economic data.  Sure, there is something to the notion that the Fed is political, but more than anything, Yellen & Co have boxed themselves into a corner.