After three straight months of declines that coincided with the stock market swoon that began in October and continued through December, consumer confidence has since rebounded and feels more stable.

1. Headline 131.4 from 121.7
2. Present 173.5 from 170.2
3. Expectations 103.4 from 89.4

Expectations Components

Business Conditions

• Improving 19.7% from 16.3%
• Worsen 8.9% from 13.8%

Labor Market

• More Jobs 18.5% from 15.3%
• Fewer Jobs 12.2% from 16.2%

The next confidence report will be intriguing to see what happens after this big rebound.

Jay Powell Testimony

The Fed Chairman is getting peppered with lots of politically tilted questions, although Senators on both sides of the aisle asked thoughtful questions about the economic woes of rural America.

Senator Sherrod Brown asked a ridiculous question out the gate. I like however that he brought up worker wages lagging.  Note: Powell says wages were sluggish since the end of recession, but are now starting to move up, and the Fed welcomes the move.

Current Growth Rate

• Wages 3%
• Inflation 2%
• Productivity 1%

I found the questioning from Senator Kennedy on the impact of the government shutdown using the CBO data of $3.0 billion being really small.  He used the word “infinitesimal.”

Q. Sen. Kennedy: Shutdown cost had infinitesimal

A. Jay Powell: That's correct

Jay Powell seemed most animated on the topic of deficits, saying this evolving line of thinking, that they don’t matter, is “just wrong.”

Message of Market

The big corporate news of the day is from Fiat Chrysler, which just announced it will invest $4.5 billion to build a brand-new factory in Detroit and add production at five existing Michigan facilities.  

Energy, tech and financials are higher, while interestingly, some of the safe havens, like utilities and real estate, are lower today.

All the major indices bounced early in the session, but the Dow Jones Industrial Average is lower on Home Depot’s (HD)earnings and double downgrade on Caterpillar (CAT).

Overall, the session is better than I anticipated, with the difference coming from that strong consumer confidence report.

S&P 500 Index	+0.10%
Communication Services (XLC)	-0.17%
Consumer Discretionary (XLY)	-0.11%
Consumer Staples (XLP)	+0.04%
Energy (XLE)	+0.43%
Financials (XLF)	+0.30%
Health Care (XLV)	-0.14%
Industrials (XLI)	+0.18%
Materials (XLB)	-0.09%
Real Estate (XLRE)	-0.12%
Technology (XLK)	+0.32%
Utilities (XLU)	-0.35%

 

 

 

 

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