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Afternoon Note

Without Noise Consumers Remain Buoyant

By Charles Payne, CEO & Principal Analyst
8/18/2017 1:07 PM
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 It’s no surprise the early rally attempt fizzled with so much noise swirling and ahead of a summer weekend. The reality of this session is the market must find a way not to come completely unglued in the final minutes of trading. There was a brief rally after the latest University of Michigan Consumer Sentiment released saw the headline spurt to 97.6.

The street was looking for headline read of 94.0. The key was the surge in expectations down the road. As I study various sentiment and confidence reports, it seems consumers and businesses have hit the reset with respect to parts of the administration’s economic agenda becoming reality.

The attack in Charlottesville, and the subsequent fallout, cast something of a shadow over the numbers as the survey didn’t capture the associated anxiety that will curb sentiment.

Nonetheless, the ability for these reads to bounce back actually highlights the ability of Main Street to keep its eye on the economic prize and maintain optimism.

 

Consumer Sentiment

Aug 2017

Jul 2017

Aug 2016

Headline

97.6

93.1

89.8

Current

111.0

113.4

107.0

Expectations

89.0

80.5

78.7

 

Going into the final hours of trading, I’m reminded of last Friday when the wheels were coming off the market over the North Korean nuclear threat. I suspect the market could get a similar bounce next Monday, but the issue of President Trump, and his relationship to the business community and several members in his own party, could slow or derail progress needed to reward the surge in consumer sentiment.

You cannot panic in this market. Everyone should have more cash than usual and be prepared to take advantage once the dust settles.

Note: the market is staging a rebound on speculation that Steve Bannon is out, which is giving a major sigh of relief to Wall Street. I get markets shouldn’t move this much on palace intrigue, but this goes well beyond the typical WH jockeying and backstabbing.

In this case, the stakes are high:

Economic Nationalism

vs

Globalism

The fact is, we need global trade, but we must stop punishing American workers, which has been the case for far too long. I’m not sure how much this changes policy. I suspect that Gary Cohn could go back to the business community, which abandoned President Trump this week, to say let’s hit the reset button and focus on lower taxes and infrastructure and less on potential trade wars.

Fridays have become notorious for fake news, and the departure of Bannon has been imminent since the inauguration. But, it’s hard to imagine a White House with him and Cohn.


Comments
Charles;
The crescendo is building regarding stories about the imminent crash of the market. All kinds of correlations being put forth with references to the Hindenburg affect, GE and S&P divergence, etc.,etc.
It's almost like there is a desire for a crash among many of the commentators.

Garro on 8/18/2017 1:58:15 PM
 

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