Consumer Confidence (December 2009)

Is Consumer Good Cheer Simply Symptomatic of the Season or is the Sun Shining Again?

Visit the front page of Wall Street Greek to see our current coverage of Wall Street, economic reports and global financial markets.

Relative Tickers: (NYSE: STT, GS, M, KSS, JWN, SKS, TJX, DDS, BONT, CPWM, ANF, ARO, AEO, ANN, BKE, CHS, CBK, DSW, GES, JCG, LTD, NWY, MW, DIA, SPY), (Nasdaq: BEBE, CMRG, CTRN, DBRN, HOTT, JOSB, ROST, PLCE, URBN, WTSLA, QQQQ)

Consumer Confidence

The Conference Board reported on Consumer Confidence this morning. December's reading marked improvement over November, as the index measured 52.9, up from a revised 50.6 mark in November. November also offered a gain over October's measure of 48.7. So we wonder what's got consumers so cheery?

We would first assume that the smiley times are simply symptomatic of the holidays. After all, there is an undeniable euphoria that coincides with the heavy holiday consumption of sweets and spirits. Nostalgic films like It's a Wonderful Life and A Miracle on 34th Street have a way of warming the heart as well. Then there's that jolly old fat guy in the red suit laughing up a storm, and they say laughter is contagious… By the way, I think the fat guy just got his bonus from Goldman Sachs (NYSE: GS). Anywho, maybe improving sentiment is just a consequence of the season…

Still, with the labor market recently bleeding jobs at a slower pace, and with only 9% of employers saying they will likely layoff more folks in 2010 (down from 16%), maybe the communal sense of job security is solidifying. Also, stocks were up a bunch this past year, albeit from bare bottom lows, especially in early March. Meanwhile, GDP is growing again and the Fed is still as fiscally friendly as can be. So maybe the sun really is rising?

Well it has not risen yet, as the Present Situation Index component of the overall sentiment figure stuck at a 26-year low. The PSI fell to 18.8 in December, down from 21.2 in November. Still, America seems to have its collective eye on the horizon, as the Expectations Index moved to 75.6, up from 70.3 in November.

Investor Confidence Up Too

A second measure reported this morning seems to reinforce the good day sunshine seen in the Conference Board's report. State Street's (NYSE: STT) Global Investor Confidence Index improved to 103.9, from 100.8 in November. While the universal measurement benefited largely from a 6.3 point advance in Asia Pacific sentiment (to an 8-month high), US confidence improved 0.9 to a level of 103.1. And why shouldn't investors favor increased risk these days, given the stock market's large advance since March. State Street says its measure, which looks at actual risk taking of institutional investors, was ahead of the curve in predicting stock market and economic recovery.

Come January though, we anticipate investor sentiment might cool along with equity values. Given the run-up this year, with the Dow Jones Industrials up 2.0% this month, and up 61% since the March 9 close, we expect investors will look to lock up gains post the tax-year threshold of December 31st.


Editor's Note: Article should interest investors in Macy's (NYSE: M), Kohl's (NYSE: KSS), Nordstrom's (NYSE: JWN), Saks (NYSE: SKS), TJX Cos. (NYSE: TJX), Dillard's (NYSE: DDS), Bon-Ton Stores (Nasdaq: BONT), Cost Plus (Nasdaq: CPWM), Abercrombie & Fitch (NYSE: ANF), Aeropostale (NYSE: ARO), American Eagle Outfitters (NYSE: AEO), AnnTaylor Stores (NYSE: ANN), Bebe Stores (Nasdaq: BEBE), Buckle (NYSE: BKE), Casual Male (Nasdaq: CMRG), Chico's FAS (NYSE: CHS), Christopher & Banks (NYSE: CBK), Citi Trends (Nasdaq: CTRN), Dress Barn (Nasdaq: DBRN), DSW, Inc. (NYSE: DSW), Guess (NYSE: GES), Hot Topic (Nasdaq: HOTT), J Crew (NYSE: JCG), Jos A. Bank (Nasdaq: JOSB), Limited Brands (NYSE: LTD), New York & Co. (NYSE: NWY), Ross Stores (Nasdaq: ROST), Children's Place (Nasdaq: PLCE), Men's Wearhouse (NYSE: MW), Urban Outfitters (Nasdaq: URBN) and Wet Seal (Nasdaq: WTSLA).

Please see our disclosures at the Wall Street Greek website and author bio pages found there. This article and website in no way offers or represents financial or investment advice. Information is provided for entertainment purposes only.