Another mixed bag on the data side.  Consumer confidence came in better than expected at 70.8 vs expectations of 69.7.  I don’t place a lot of merit in the consumer confidence numbers as they tend to be highly correlated to stock market performance.  Consumer confidence figures tend to be a coincident indicator and very often can be seen as a contrarian indicator as consumers get complacent.  Nonetheless, confidence is an important factor in any market and tends to lead to a crowding effect where investors chase performance.

Personal incomes spiked in May due to the stimulus plan.  Monthly incomes were up 1.4% vs expectations of 0.4%.     The boost in income did not translate to a rise in spending, however, which was in-line with expectations at 0.3%.  The weekly retail sales figures have been very poor in June so don’t be surprised when we get very weak chain store sales again this month.   The lack of spending is also a sign that consumers are still saving money.  This is a a clear sign that the deflationary deleveraging period is not behind us.  Consumers are still minimizing debt.  Not a good sign for an economy that is 70% consumer driven….

Cullen Roche

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