The American consumer is facing a reality – gas prices are higher now and they will go higher as winter wanes, spring moves forward, and summer heads into full swing. This reality is reflected in the latest consumer sentiment report that just came out.
In its monthly survey, the University of Michigan said its main index of consumer confidence unexpectedly fell to 74.3 in March from 75.3 in February, in a sign that households may be getting increasingly cautious over the increase in gas prices at the pump.
Makes sense to me, especially after what happened last year in March – oil prices rose quickly to the point where, once again, the media hammered the specter of $5 per gallon gas. Even though gas did rise into the upper range of $4, it did not get to $5. That is not to say it won’t get there this time, but it is to say it is understandable that in the face of continuing good economic news, the consumer is pulling back just a bit. It appears the market is taking this into account, as today it is trading just about flat. It might well sell off later today, and if it did, that would be fine. A little correcting toward more consolidation would be a good thing just about now. The market has swallowed lots of real estate on the upside since October, especially in the first three months of this year.
US factory output rose modestly in February after biggest 2-month rise since 1998.
The above indicates the trend of economic good news is continuing. At this point, this is all we can ask for, and it is what we need to keep the market in place, that is, not running for the hills on any bad news. It is not a big move as of yet, but recent treasury bond indicators slightly suggest investors might be thinking bubble, and they might be getting closer to major reallocation into the equities market. Currently, the sentiment seems to favor a correction, or, an opportunity to get in at a lower price. If that correction does not come, as I said recently, investors will begin chasing the market as it rises higher on good economic news, and as the news out of Europe indicates stabilization in the debt crisis and an upturn in the economic picture.
European equities climbed to levels not seen since last summer on Friday, with charts pointing to more near-term gains as long as earnings and global economic data remain supportive.
The above reflects exactly what I just stated a moment ago – investors are starting to sense stabilization in Europe’s financial and economic picture, while back here in the USA, investors are starting to sense stabilization in the US financial sector. The recent stress tests the Fed conducted sent the message that, despite the fact all is not completely well, the reality is that all is way better than it was, and US banks, both large and small, are getting healthier as they continue to capitalize to meet the Dodd-Frank stipulations, and for the multinationals, the Basel III stipulations as well. Yes, financials are having quite the run. I hope your money is working, as the fast moving wheels keep on churning. This could go on for a while longer, indeed.
Financials have fueled the latest leg of gains. The sector had a quiet follow-up to the near 4% surge that it scored two days ago, but this session it added almost 2% more. Financials are now up more than 20% year to date. That makes them the best performing sector of 2012.
Trade in the day – Invest in your life …
