Consumer confidence for August edged up slightly from the initial read, but less than expected.  The overall reading of 90.4 is less than the 91.9 headline last year, and the 91.5 anticipated on Friday.

• Current Conditions -2.7 percentage points to 106.1
• Expectations +3.2 percentage points to 80.3

Interestingly, current conditions were held back by young adults whose wage increase was smaller than expected even as their bills grew faster than believed. Overall, more people are saying they are concerned about the election and that neither candidate is more likely to improve economic conditions or Americans personal finances.

The Abyss of Confidence

Meanwhile, I want to note that while consumer confidence and the stock market have rebounded from their lowest levels a few years ago, the stock market is now 46% higher than it was back in 2000; while confidence is still down 19%. For decades, consumer confidence missed the stock market; and since 2000, the S&P 500 is up 46% as confidence is still 19% lower.  Some say that one reading reflects reality and the other reflects hype and manipulation.  

It’s getting harder to find cheap stocks – but it helps to buy stocks in hot niches of the economy. 

Rally Confirmation

I often refer to the Dow Theory (a must read for any investor) that says transportation names must corroborate a market rally.  This has been a headache for many old school investors as the Dow Jones Transportation Index (DJT) is not only failing at key resistance points (top of the trend line), but is well off its all-time high.

Recently, the rails have come on nicely, but airlines and trucking names have industry-specific issues as well as macroeconomic hurdles.  At the very least, I would feel much better if transportation names found a way to lift the DJT through 8,400.

Today’s Session

Market bias remains to the upside but in a very cautious manner.   Of course, this stealthy bull market has been remarkable with respect to this most recent leg higher, and lack of celebration, or even public awareness.  Most non-observers either think the market is down or on the cusp of a crash.

The biggest news this morning comes from the NY Fed’s Empire State report on manufacturing.  The Headline number missed consensus, and the overall trend is lurching lower, as it has been for the past 14 years (see chart).

Slight Positives

• Employment 1.10 from -6.19
• Workweek 2.06 from -5.49
• New Orders 1.04 from -1.82

Interestingly, “expectation” numbers are the reverse showing stubborn confusion and frustration about the economy -and perhaps political- climate over the next six months.