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    MARKET EDGES

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EYE ON CONFIDENCE

U.S. consumer confidence rose slightly in March, but sentiment remained near an all-time low according to the Reuters/University of Michigan Surveys of Consumer Confidence. The final index of confidence rose to 57.3 in March from 56.3 in February. This was a touch above consensus expectation of a 56.6 reading.

Since Obama’s State of the Union Address late last month and with his daily addresses to the media, consumers now have a better picture of how he is handling the crisis. To a certain extent, this means that consumers can now weigh in on the state of the future economy with more knowledge and our belief is that most like what they hear. Despite the employment outlook continuing to look dim, consumers are not hiding in a hole. As evidenced by the Commerce Department report, consumer spending edged up 0.2% in February, consumers are finding more reasons to get out (and spend) and feel better about themselves—be it with a trip to a casual dining restaurant or a trip to the mall with the kids. All of this adds up to stability in the confidence indicators.

What is not included in this number is the fact that stocks are seeing their biggest monthly rally since 1974; the S&P is now up 23% from the March low. Taken together, the improved sentiment about the government's ability to fix the financial system, better-than-expected economic news, and surprise EPS announcements from early cycle companies are driving the market higher.

The implication is that the next move in confidence in April is higher not lower.

Howard Penney
Managing Director