• It's Here!

    Etf Pro

    Get the big financial market moves right, bullish or bearish with Hedgeye’s ETF Pro.

  • It's Here

    MARKET EDGES

    Identify global risks and opportunities with essential macro intel using Hedgeye’s Market Edges.

The month of May was a difficult month for everything but consumer confidence.  Let’s recap the Month of May:

  1. The S&P 500 declined by 8.2%.
  2. Retail sales declined by 1.2%.
  3. The consumer sectors – Consumer Discretionary (XLY) and Consumer Staples (XLP) – declined 7.0% and 4.6%, respectively.
  4. The Housing market is collapsing.
  5. Consumer credit remains tight.
  6. Initial Jobless claims were horrible and the unemployment rate remains high.
  7. The economy is not growing as fast as the government is leading us to believe.

Today the University of Michigan is reporting that the Sentiment Index rose in June to 76.0 from 73.6 in May and up from 70.8 last year.  The Index is now at its highest level since January 2008. The Index remains 21.6% below the peak in January 2007 and up 37.4% from the low of 55.3 in November 2008.  Year-to-date, the confidence index is up 4.8%.   

The Expectations Index rose by 1 point sequentially and is only up 1.3% year-to-date.  The Expectations Index is down 20.3% from the peak in January 2007 (a year before the start of the recession and two years before it was declared by NBER).  Unfortunately, during the past 12 months the Expectations Index has not posted any further gains, signaling that consumers expect a very slow pace of growth in the year ahead.

While expectations remain muted, the consumer seems to more content with current condition.  The Current Conditions Index rose by 4.6 points sequentially and is now up 9.7% year-to-date.

With consumer assets deflating (equities and home prices) it seems unlikely that the current momentum in confidence will be sustained.

Howard Penney

Managing Director

MACRO MIXER – MAY WAS UGLY FOR EVERYTHING BUT CONFIDENCE! - uofm1

MACRO MIXER – MAY WAS UGLY FOR EVERYTHING BUT CONFIDENCE! - uofm2

MACRO MIXER – MAY WAS UGLY FOR EVERYTHING BUT CONFIDENCE! - uofm3