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KWN - Special Tuesday Consumer Confidence ‘Chart Mania’
One of the things central planners look at very closely is Consumer Confidence. This is one of the important pieces of the puzzle, all over the world, when it comes to setting monetary policy. Today top Citi analyst Tom Fitzpatrick put together another ‘Chartapalooza,’ this time covering the sagging Consumer Confidence. Below is his piece and today’s KWN Consumer Confidence ‘Chartapalooza’:
Tom Fitzpatrick latest report:
“The present picture suggests that after 2-3 years of drifting higher, renewed losses have begun that could even eventually see a new low in the downtrend that began in 2000.
Consumer confidence peaked at 71.60 in February this year (Almost identical to the 72.00 peak seen in February 2011 and suggesting that a double top could be in place. The neckline of this double top stands around 41 and a break below would suggest a level as low as 10 compared to the Feb 2009 low of around 25.
This suggested a move as low as 51 which was slightly undershot with the 54 low hit in October 1982. In addition, after the collapse in consumer confidence in 1972-1974 (A period that we believe resonances closely with 2007-2009 Housing collapse; Equity market collapse; severe recession; spiking oil and Gold prices; weak USD and aggressive Fed easing from 1974-1976 (13% to 4.75%)
Thereafter the recovery in 1974-1978 was much stronger than that seen today before we almost revisited the lows in 1980 (See chart above).
The turns in consumer confidence in 2000, 2007 and 2011 led the Equity market peak by 2-3 months (See chart below). Consumer confidence peaked in February this year and the peak so far in the S&P 500 was April (May in the DJIA)
Bottom line: While any individual number is a ‘crapshoot’ at best, the trend here looks clearly to be lower in consumer confidence. We would not be surprised to once again see ‘misses’ in expectations in both the consumer confidence number today and the ISM number tomorrow.
The double top seen in Consumer Confidence in 1980-1981 saw the equity market respond with a high to low move in 1981 of 26% (See chart above). (This is) very close to our anticipated 27% drop (in equities) this time.”
It is very important to note that the drop in Consumer Confidence that Fitzpatrick outlined above, where it forecasts a possible plunge from its current level of 62, to 25, would comprise a further staggering 60% decline in Consumer Confidence. This is the type of thing that has central planners all over the world extremely worried.
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
The interviews with legendary Art Cashin ($612 billion UBS), Gerald Celente, Don Coxe ($538 billion BMO) and Eric Sprott are available now. Also, be sure to listen to this week’s line-up of other KWN interviews which include MEP Nigel Farage, Peter Schiff, John Embry and Egon von Greyerz by CLICKING HERE.
Eric King
© 2012 by King World News®. All Rights Reserved. This material may not be published, broadcast,
rewritten, or redistributed. However, linking directly to the blog page is permitted and encouraged.
July 31, 2012
