consumerThe September installment of University of Michigan’s Consumer Sentiment Survey reported Americans are feeling pretty optimistic. Consumer sentiment rose to the second highest level since 2004, and consumer expectations reached the highest level since 2004. Surveys of Consumers chief economist, Richard Curtin, wrote:

“Consumers anticipated continued growth in the economy that would produce more jobs and an even lower unemployment rate during the year ahead…The largest problem cited on the economic horizon involved the anticipated negative impact from tariffs. Concerns about the negative impact of tariffs on the domestic economy were spontaneously mentioned by nearly one-third of all consumers in the past three months, up from one-in-five in the prior four months.”

Investors weren’t as optimistic, according to the American Association of Individual Investors (AAII). Last week, the AAII Investor Sentiment Survey reported bullish sentiment dropped more than 10 percentage points. The results were:

  • Bullish 1 percent of respondents (historic average: 38.5 percent)
  • Neutral 1 percent of respondents (historic average: 31.0 percent)
  • Bearish 8 percent of respondents (historic average: 30.5 percent)

Despite the apparent shift in investor attitudes, stock markets moved higher last week. Vito J. Racanelli of Barron’s wrote:

“The stock market radiated confidence this past week, finishing about 1 percent higher despite choppy action. There was a plethora of good economic news – from lower-than-expected inflation to sky-high business and consumer confidence numbers – that drove shares up. Not even a ratcheting up of tough tariff talk Friday on the part of the U.S. could dampen investor enthusiasm for long.”

Some believe the AAII Sentiment Survey is a contrarian indicator. Last week, that may have been the case.

screenshot 9.19.18

* These are the general views of Jonathan DeYoe and they should not be construed as investment advice for any individual.

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* The DJ Equity All REIT Total Return Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* The original “Weekly Commentary” was prepared by Peak Advisor Alliance. Jonathan DeYoe is a member of Peak Advisor Alliance and adds, subtracts and edits before publishing.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

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* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

* Stock investing involves risk including loss of principal.

* “All Investors Are Consumers, but Not All Consumers Are Investors”

Sources:

http://www.sca.isr.umich.edu
https://www.aaii.com/sentimentsurvey
https://www.barrons.com/articles/the-dow-gains-238-points-tariffs-be-damned-1536973652?mod=hp_highlight_6 (or go to https://s3-us-west-2.amazonaws.com/peakcontent/+Peak+Commentary/09-17-18_Barrons-The_Dow_Gains_238_Points-Tariffs_be_Damned-Footnote_3.pdf)
https://www.aaii.com/journal/article3/is-the-aaii-sentiment-survey-a-contrarian-indicator