Consumer Confidence Slides, Misses By Most In 8 Years

Tyler Durden's picture

Following December's biggest-surge-in-4-years for UMich consumer confidence (though a miss), UMich data has fallen back to 80.4 - missing expectations by the biggest margin in 8 years. This is the 4th miss in the last 5 months as hope for moar multiple expansion begins to fade. Both current conditions and the outlook indices fell (for the first time sicne October). As UPS would says, confidence dropped because there was too much confidence...



Following Bernanke's "hope" strewn farewell speech yesterday, gaining the confidence of the market (and main street) seems his big plan...

As a gentle reminder, as we have noted previously - this move in confidence is key...

But, it's all about confidence... investors will not be willing to pay increasing multiples unless they are confident that the future streams of earnings are sustainable and forecastable... And simply put, the current levels of Consumer Sentiment need to almost double for the US equity market tp approach historical multiple valuation levels...




and the cycle appears to be shifting...

Via Citi,

Is consumer confidence set to turn?

Consumer Confidence is once again following a dynamic where we see it move higher for 4 years and 4 months before beginning to collapse

  • Moves higher from 1996-2000 with a smaller dip halfway through in October 1998
  • Moves higher from 2003-2007 with a smaller dip hallway through in October 2005
  • Moves higher and so far tops out in June 2013. Also sees a small dip halfway through in October 2011.


Higher yields do not help confidence...


A sharp rise in mortgage rates has a negative feedback loop to consumer confidence. For those families and individuals that were now looking/able to enter the housing market, the recent spike in rates acts as a headwind.


In addition to the economic backdrop, there is plenty of tail risk as we head into the end of the year. Oil prices have been rising since the summer began (and in reality since the Summer of 2012), partially due to geopolitical risks which are very much “top of mind.” A bigger spike due to a supply shock would choke the economic recovery.(In our view)

In the US, the appointment of a new Fed Chairman and the upcoming budget/debt ceiling debates are likely to bring added volatility. Tapering itself can also induce concern as the “Bernanke put” is being removed from markets.

In Europe, many of the structural problems related to the single currency union have not actually been addressed and the peripheral countries could still create turmoil going forward (see Fixed Income section focusing on Italy in particular for more on this). There has also been little concern with both the German elections and the German Court decision on the constitutionality of the OMT program. A surprise in either of these could be cause for concern.

Emerging Markets are still not out of the woods yet as growth has been weak relative to expectations and countries with current account deficits are beginning to feel pressure in their FX and Bond markets. This is an issue we believe is only starting to develop which we will continue to expand on at later dates.(We have also looked at this in our EM FX section this week)

Overall, the weak economic backdrop, poor housing recovery and potential for tail risk events over the next few months suggest that we have topped out in Consumer Confidence, a warning sign for equity markets.


The relationship between Consumer Confidence is clear, and IF June did mark the high and Confidence continues to decline, then we would expect to see that translate to weakness in the equity markets. The removal of the “Bernanke put” only adds to this concern.

A major turn has taken place in equity markets on average four months after Consumer Confidence turns, which would point to a decline beginning around September-October. As we have previously expressed, we remain of the bias that a correction in equity markets on the order of 20%+ is likely this year/ into 2014 and the current dynamics support such a move.

Should we see a decline of that magnitude, it is almost certain that yields would move lower in a rush to safe assets.

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
AccreditedEYE's picture

Are we pretending to care? Is today a "bad news is good news" day or "bad news is bad news" day? I don't think it even matters anymore.

Boris Alatovkrap's picture

Is very insecure citizenry rely on statistician proclaim of confidence instead of look around or pull out electronic calculator. Look around, easy see scofflaw political class. Perform mathematical calculation, easy see bankster class lawless dilution of currency destroy wage and saving. Natural it is feel "bad news" when you are watch self and fellow citizenry rob sightless.

camaro68ss's picture

(In the computer voice from the movie Aliens)The auto destruct sequence has been initiated. You now have xxxx to exit the market. (sirens blearing)

eclectic syncretist's picture

Did you start in with the potato vodka early today or what?

CarrierWave's picture

Every sector goes through cycles and takes a breather from time to time.

This is only one more ZH article in a series of thousands going back several yeras stating how bad things are or of an imminent collapse.

Alas, those who stayed away from the markets or worse still - shorted the markets are the only ones bruising and licking their financial wounds.

There is no Collapse around the corner and no repeat of 2008-2009. The Central Banks are well coordinated and on top of things and will not allow any repeat of the drops we saw 5-6 years ago.

Stay with the trend because the markets ARE going higher in 2014. Take into account also the fact that this is an Election year - the Gov will not tolerate anything more than a 3-5% pullbck in stocks.

NO ONE on ZH can even propose a serious scenario for another economical collapse playing out for real. It's all empty speculations and insinuations.



Boris Alatovkrap's picture

You are make joke, yes? Please employ of /sarc tag for clarification.

akak's picture

Nyet, just I smell disciple of Church of Krugman, broken windows be upon him!

Obchelli's picture

You are so right that it's simply sickening - anything is Bullish - Good is Good and Bad is Better

Boris Alatovkrap's picture

BTFD or BTATFH... Boris is remind of surge in US Treasury when S&P/Moody is downgrade. Downgrade is create market uncertainty and panic so investor is quick move to safe haven of... US Treasury.

Irrational Exuberance or Abject Stupid...?

Boris Alatovkrap's picture

<-- Irrational Exuberance

<-- Abject Stupid

spastic_colon's picture

"Irrational Exuberance or Abject Stupid...?"



new game's picture

glue from best horse at glue factory of tresuries...

hold this together with glue from horse anf bailing wire til set.

hope it holds...

Headbanger's picture

Boris is say "look around or pull out electronic calculator" so I go take Burroughs adding machine to ask consumer in mall shopping..

But nobody there!

Boris Alatovkrap's picture

You are carry or push on cart?

LMAOLORI's picture



"But nobody there!"


Best Buy Is Best Forgotten


Over 47 Million are on food stamps and plenty of others are just living paycheck to paycheck but at least they have jobs -  kind of the fly in the ointment of the hahaha recovery. 





"We are in a depression, according to Lewis. He asserts that if we calculate unemployment as they did in the 1930s, we would have unemployment numbers that rival that era. The only reason we have the percentages we have now (6.7%) is because “we don’t include those who have dropped out of looking for a job, who have given up. If we included those, the unemployment number would be at 20%.”




Sudden Debt's picture

pretend to care?

like my father in law used to say:


rotagen's picture

Illusionized robotic Denial Optimism Ratio at Minimum Expectancy, Methane bomb mass extinction probability at maximum expectancy, gay criminal chicagoite puppet dictator Fecal Dispensary Projections on Overload.

 I'm speaking Lordistically here.

Whoa Dammit's picture

We still have consumers?  And here I was believing  that we had all been converted to a nation of rich and poor takers of government hand outs.

Boris Alatovkrap's picture

Graze or consume? Is matter? Sheeple is eventual be sheer and slaughter for Mutton Chop.

CheapBastard's picture

Here’s a list of the the 33 stores that J.C. Penney will be closing.


State City Shopping Center AL Selma Selma Mall CA Rancho Cucamonga Arrow Plaza CO Colorado Springs Chapel Hills Mall CT Meriden Meriden Square FL Leesburg Lake Square Mall FL Port Richey Gulf View Square IA Muscatine Muscatine Mall IL Bloomingdale Stratford Square Mall IL Forsyth Hickory Point Mall IN Marion Five Points Mall IN Warsaw Marketplace Shopping Center MD Salisbury The Centre at Salisbury MI Marquette Westwood Plaza MN Worthington Northland Mall MS Gautier Singing River Mall MS Natchez Natchez Mall MT Butte Butte Plaza Shopping Center MT Cut Bank (N/A) NC Kinston Vernon Park Mall NJ Burlington Burlington Center NJ Phillipsburg Phillipsburg Mall OH Wooster Wayne Towne Plaza PA Exton Exton Square Mall PA Hazleton Laurel Mall PA Washington Washington Mall TN Chattanooga Northgate Mall VA Bristol Bristol Mall VA Norfolk Military Circle Mall WI Fond Du Lac Forest Mall WI Janesville Janesville Mall WI Rhinelander Lincoln Plaza Center WI Rice Lake Cedar Mall WI Wausau Wausau Mall
Osmium's picture

What the hell is happening in Wisconsin?  Closing 5 stores?

Ness.'s picture

That number has already been forgotten.  It means nothing unless it's a beat.  Stocks rallied after the release.  Toss your fancy dancy charts on the fire, at least they'll keep you warm.

yogibear's picture

With QEen Yellen,  they believe they are the market.

Duddley is always out informing his buddies at Goldman.

spastic_colon's picture

revision of calculation in 3....2....1

NOZZLE's picture

I'm very confident that most consumers are too stupid for their own good

yogibear's picture

The Fed prints the money, we buy Chinese crap from Wal-Mart and increase debt, rinse and repeat.


Heffer's picture

..and the Waltons line thier pockets on the backs of the American people.

101 years and counting's picture

consumer confidence....still well below 90.  what used to be the cutoff for growth/recession.

slotmouth's picture

The only consumption related number that matters is the fed's consumption of bonds and MBS.

Obchelli's picture

Are they going to wope their arses with that? When time to unwind comes?

NoDebt's picture

Looks like most people are doing a fine job of adjusting their expectations lower with each cycle.  80 is the new 100!

youngman's picture

They probably could not buy a snow they lost confidence

AbelCatalyst's picture

The initial post to both the housing starts and consumer sentiment numbers on the CNBC web site were very positive... They BOTH had to be corrected... How does this happen twice in one day? I saw the headline come up, then went to ZH to verify... When I went back to re-read the stuff from CNBC the headline began "CORRECTION"... I wonder if the rose colored glasses are so think they refuse to see any bad news, or is there something more going on?? After all, I saw the headline and moved on (if I didn't go to ZH to verify, I would have never seen the "correction")... Ahhhh, the MSM - gotta love em...

Dr. Engali's picture

The credit card bills for Christmas are coming in, and people once again have to face the fact that they are going to pay double the price of what their cheap Chinese trinket cost if the would have paid cash.

WhyWait's picture

The Doctor's right.  Folks really stretched to make Christmas work.  But now they are back in reality, and it doesn't look good.

As they waited in the checkout line, their pride in pulling it off again was pride in their sacrifice, pride weighted with sorrow and pain.  There was many a secret tear on those checkout lines.  

Christmas gifting is a glue holding tattered, strained and scattered families together - the parents working two jobs each proving their love for their kids, and perhaps for the uncle they had to evict from the couch, the nephew living in a trailer in Manitoba, the step-daughter in a welfare motel with their step-grandchild. For many, cheap Chinese junk on credit was the only way they knew to do it.    

Dismiss them as fools and chumps at your own risk. They understand more than you think. 

g speed's picture

at WW---poetic and profoundly near reality I think ---a plus 1 for you.

Schlomo Bergstein's picture

How much bad news can possibly happen in one day?

Smegley Wanxalot's picture

Bad news? More like true news.

If good news is disseminated you can bet your ass it is a lie from the government and the MSM.

Smegley Wanxalot's picture

Time for some falsified government stats telling us all how great everything is to fix this!

Sufiy's picture

Jordan Roy-Byrne: Junior Mining Stocks Have Bottomed

 Jordan Roy-Byme is presenting his call on the turn around in junior mining stocks.Sentiment in this sector is very low now: everybody hates Gold, Silver and mining shares, but below the radar screens the best stories are getting bids again. Goldcorp bid for Osisko can be that turning point everybody is waiting for. We need further follow through with Gold crossing $1270 and Silver above $21. Then we will have the time when juniors will be jumping 10% -15% a day and people will start to be afraid to miss out the rally. Stocks like McEwen Mining are trading now with 31 million shares being sold short and it will be the fuel for the breaking to the upside.

eclectic syncretist's picture

No shit sherlock, except he should have said that they have DOUBLE-bottomed.  Miners have been going up for a month now.  I've got a bid in on more SVM as I right.  2014 is going to be a good year!

SheepDog-One's picture

Gee it MUST be bad if even the Free Shit Army is feelin down in the dumps.

thewayitis's picture


 I say its time to jump ship before this bitch goes down .......



eclectic syncretist's picture

Yesterday and right now market volume is very low, which often happens right before a sharp decline.  I'm not betting on it though.