The market didn’t get any relief from the latest consumer confidence report.

December’s confidence headline of128.1, was well below consensus of 133.7, and down from prior month's 136.4 read, which was revised higher. The report is a tale of current reality and optimism, and growing worries about the future. 

Present Condition

Current conditions reported at 171.6, virtually unchanged from the prior month, which means people feel great about jobs and wages.

Expectations

The Expectations Index came at 99.1, down dramatically from 112.3 in November.  It was the second consecutive decline in expectations for the next six months.

The news curiously saw the market initially edge higher, but then it turn decidedly lower.  Beyond today’s session, the report underscores growing anxiety about the next six months. Market gyrations and everything going on in Washington, D.C. added to worries.

The report belies the assumption of out of control consumers that need to be corralled by a slow down in the economy.

I continue to marvel at the fact this report hit its all-time high of 144.7 eighteen years ago.  Stocks, housing and the overall economy has endured sharp declines and rebounded significantly during this period to new highs but our confidence as a nation still hasn’t completely returned. 

The Unknowns

The market is still reacting to the known unknowns, but I’m more concerned with the unknown knowns.

Reports the White House may issue an executive order banning products from Huawei and ZTE are getting more attention than he announcement China will remove tariffs on hundreds of items at beginning of the year, and dozens of IP products next July.

We also know trade officials from the United States will be heading to China in early January as China continues to take major steps toward curtailing forced transfers of technology.

I don’t think the shutdown is impacting the market, but all the battles and investigations in Washington, D.C. only add clouds of unknowns.

My greatest concern; however, is what I don’t know. It could be nothing or it could be the real reason for the sloppy pullback.

For now, the market is oversold. I reiterate, it doesn’t mean it snaps back or can’t go lower, but it does mean you must take care to not to panic here.