It would appear that pending wars in Europe, freezing snow storms (and droughts) in the US, and Asian credit concerns have finaly taken their toll on US consumer confidence. At 79.9 relative to an expectation of 82.2 this is the biggest miss since Dec 2012 and lowest since Nov 2013.Current conditions rose modestly but the economic outlook fell by its most in 5 months. UMich confidence remains notably below the July 2013 peak levels (which correspond quite coincidentally to the same 4 year 4 month cycle we have seen in the prior 2 cycles) despite stocks have made higher highs since then as the decoupling remains in place.
Confidence fades and is well off July 2013 peak levels...
[4]
As we have noted previously [5] - 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...
[6]
and the cycle appears to be shifting...
Via Citi,
Is consumer confidence set to turn?
[7]
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.