Tuesday, February 23, 2010

Is the Consumer Confidence Index an Economic Smoking Gun?

The Conference Board's Consumer Confidence Index took an unexpected cliff-dive today, as the index dropped 11 points to 46, from last month's 56 level and and expected reading of 55.9 for this month.  The "Present Situation Index" component dropped to its lowest reading in 27 years.  This component of the index is derived from the consumer's view of current business conditions and the job market. The short-term outlook also dropped hard, as consumers expressed pessismism about job prospects and anxiety over keeping a job.

Clearly, this datapoint is in direct conflict with the manipulated Government data that's being released and with the "soft-sell" optimism eminating from our President and Fed policy-makers - collectively a.k.a. now known as "The Oracle of Orwell in DC."

The key is to look at what is really going on beneath the Orwellian veneer that's been liberally applied and highly polished by the Fed, Wall Street and the Obama Administration.  Here is a good example of reality:  Mass layoffs surge in January, highest level since July 2009:  Link from Zerohedge.com; or how about the fact that mortgage delinquency rates hit a new record high in January:  Link from Bloomberg;  or perhaps the explosive commercial real estate disaster has people worried:  Link from CNN.

I'm not even scratching the surface on a whole viper's nest of fundamental economic problems which are converging all at once.  Some of these include the growing State unemployment insurance fund deficits rapidly expanding in several States, the rapidly growing FDIC funding deficit, and the fact that there is a growing number of people who have become perpetually dependent on continued extension of unemployment benefits by the Federal Government, which now stands at 2 1/2 years.

All things considered, I'm surprised the Conference Board confidence index was still in the 40's.


  1. dave how long will this treasury ponzi auctions go on?!

  2. That's a great question Anonymous. The thing is, even if the Chinese/Japanese stop buying altogether, the Fed will just print money an monetize the auctions. I'm sure you saw this earlier:


    That gives the Fed plenty of liquidity to buy toxic assets and monetize Treasury takedowns from primary dealers after auctions.

    In running thru the mental scenarios in the past, I've come to the conclusion that this Ponzi scheme may continue until the dollar collapses.

    Your thoughts?

  3. On a related note: The market was, as I am sure you know, down today, along with the CC#s today, but Terry Laundry, he of the vaunted T Theory, is bullish. His forecast, distilled, has the bear market resuming in late summer. I realize one should endeavor to not apply funnymentals to market analysis, but it seems almost beyond belief that the market could hold up for approximately another six months, and yet, Mr. Laundry, while hardly infallible, is very good at what he does.

  4. Well, from a fundamental standpoint, the Dow/SPX should be priced at least 50% below where they closed today (I'm dead serious). But that not being the case, if you believe the Fed is going to have to start accelerating their printing endeavors, and I don't see how they can avoid it unless they want the system to collapse, then it is very likely the market will at least tread water if not go a lot higher.

    Of course, gold/silver/miners will substantially outperform all sectors.

  5. The bond sale = weak market dynamic is in full effect and a late week rally (maybe a big one) should prove beyond any doubt the rigged game at hand. That said things are getting disjointed to a large degree and something is going to break. Have we really come to this?

    Silver is looking so good to me right here.

  6. gyc, yes we have come to this. in fact, things going on behind the scenes that we can't see or perceive are even more distorted than any of us realize.