Confidence, and What Comes With It

There is a strong positive feedback mechanism involving consumer sentiment and the economy. As conditions get better, people get more confident, which causes them to spend more, so companies hire more, which makes people more confident….
That all works until it doesn’t, and then the positive feedback goes the other way, making people get less confident as they see the economy slowing, making them spend less money, which causes layoffs, which makes people less confident….
The University of Michigan’ Survey of Consumers Index of Consumer Sentiment hit 100.7 in October 2017, its highest reading since January 2004. It has backed off just a little bit since that October reading, but is still at a very high level, showing that consumers are feeling pretty confident.
This week’s chart shows the relationship of that University of Michigan number and the U-3 unemployment rate. There is an interesting lag in the unemployment numbers, and that is highlighted with the 10-month time offset employed in the chart above. I want to emphasize that the consumer sentiment data plot is inverted in that chart so that we can better see the correlation to unemployment.

This post was published at FinancialSense on 12/15/2017.

Nobel Laureate ‘Discovers’ Cause Of Opioid Crisis: Complete Economic Destruction Of The “White Working Class”

For several decades now the American Midwest has suffered from unprecedented economic decay courtesy of a persistent outsourcing of manufacturing jobs in the automotive and steel industries, among others. As we’ve noted frequently, that economic decay has resulted in a devastating surge in opioid overdoses that claim the lives of 100s of people each year.
Of course, many attribute Trump’s staggering victories in states like Michigan, Wisconsin, Ohio and Pennsylvania to his efforts to tap into the frustration of the dispossessed Midwest masses by promising a rebirth of the manufacturing economy that once provided them a solid middle-class lifestyle.
That said, no economic crisis is truly “discovered” until an Ivy League, Nobel-prize-winning economist says it is. As such, we present to you the intriguing findings of Nobel Laureate Angus Deaton who said he was “looking for something else” when he noticed a staggering increase in white mortality rates for people aged 50-54. Per Market Watch:
That was the case with landmark research undertaken by Nobel Prize winning economist Angus Deaton. The Princeton economist, working with his wife Anne Case, stumbled on the fact that mortality rates were rising for working-age white Americans since 1999.

This post was published at Zero Hedge on Dec 14, 2017.

Great (Stock) Expectations

Via Dana Lyons’ Tumblr,
Consumers’ expectations for stock market gains have never been higher – or more assured.
Since the August stock market low, bulls have had it pretty good. Rally participation has been excellent, as has price structure for the most part. Outside of a textbook successful test of The Most Important Level In The Stock Market, it has basically been a parade of new all-time highs in the major averages. So with the stock market hitting on all cylinders, there is little reason not to expect more of the same. That may just be the problem, however.
With stocks up sharply since August, not to mention the past 8 years, it should be no surprise that bullish sentiment has followed suit. That’s not necessarily a bad thing. Bullishness is required to attract flow of capital into stocks and, thus, propel the market higher. However, bullishness can eventually become so rampant that there is essentially nobody left to buy stocks – or at least not enough to perpetuate a rally. Identifying those relevant extremes is the tricky part, though.
A case in point can be found in the University of Michigan’s Survey of Consumers. One of the questions asked of respondents in the survey is their estimation of the ‘probability of an increase in the stock market in the next year’. Among the various ways that the UM breaks down the data is by taking the mean response to that question. We mentioned in a post last month that the most recent reading (August) saw the mean response register in at 62.7%. As we noted, that was the 2nd highest reading in the survey’s history (back to 2002) behind only June 2015, which, of course, occurred near an important intermediate-term top.

This post was published at Zero Hedge on Nov 29, 2017.

Michigan Township Blocks Nestle From Bottling, Reselling Its Groundwater

A small Michigan township is making a stand against Nestle, temporarily blocking the company from pumping millions of gallons of groundwater for bottled water. Citizens near Evart, Michigan became outraged when Nestl proposed to build even larger pipelines to increase the flow of water to its plant in Standwood. Global News CA details the local resistance to Nestl’s proposed expansion to collect even more ground water:
The added capacity provided by the proposed booster pump would make it possible for Nestl to extract an estimated 1,500 litres of groundwater per minute, representing more than 4.2 million bottles of water in a 24-hour period. That’s equal to 794 million litres of water annually.
As explained by Global News CA, ‘the company is currently limited to pumping 945 litres per minute, up significantly from its pre-2015 cap of 565 litres per minute.’
Nelson Switzer, Nestl Waters’ chief sustainability officer told the Stamford Advocate, ‘just because we’re putting in the application for 400 [gallons] doesn’t mean it’s going to run at 400 gallons per minute most of the time. Switzer added, ‘the fact is we want to make sure t

This post was published at Zero Hedge on Nov 23, 2017.

UMich Consumer Confidence Slides In November As Faith In Stocks Falters

Having hit the highest level since Jan 2004 in October, November’s final print shows the University of Michigan Consumer Sentiment index fell from 100.7 to 98.5, as both hope and current conditions slipped.
Expewctations for inflation dipped. Consumers saw inflation rate in the next year at 2.5 percent after 2.4 percent the prior month. Inflation rate over next five to 10 years seen at 2.4 percent, lowest since May, after 2.5 percent in October

This post was published at Zero Hedge on Nov 22, 2017.

This Michigan Bank Just Brought Back The Zero-Down Mortgage; They’ll Even Cover Your Closing Costs

A small savings bank in Michigan, Flagstar Bank, has come up with a genius, innovative new mortgage product that they believe is going to be great for their investors and low-income housing buyers: the “zero-down mortgage.” What’s better, Flagstar is even offering to pay the closing costs of their low-income future mortgage debtors. Here’s more from HousingWire:
Under the program, Flagstar will gift the required 3% down payment to the borrower, plus up to $3,500 to be used for closing costs.
According to the bank, there is no obligation for borrowers who qualify to repay the down payment gift.
The program is available to only certain low- to moderate-income borrowers and borrowers in low- to moderate-income areas throughout Michigan.
Borrowers would not have to repay the down payment or closing costs. But a 1099 form to report the income would be issued to the Internal Revenue Service by the bank. So the gifts could be taxable, depending on the borrower’s financial picture.
Flagstar said borrowers who might qualify for its new program typically would have an annual income in the range of $35,000 to $62,000. The sales price of the home — which must be in qualifying areas — would tend to be in the range of $80,000 to $175,000.

This post was published at Zero Hedge on Nov 17, 2017.

Doug Noland: Arms Race

This is a syndicated repost courtesy of Credit Bubble Bulletin . To view original, click here. Reposted with permission.
Bloomberg: ‘Treasuries Surge as December Hike Odds Drop After CPI Miss.’ Year-over-year CPI was up 2.2% in September, with consumer inflation above 2% y-o-y for six of the past 10 months. The Producer Price Index gained 2.6% y-o-y in September. Yet, apparently, the focus will remain on core CPI (along with core personal consumption expenditure inflation) that, up 1.7% y-o-y, missed estimates by one tenth and remained below 2% for the sixth straight month. Notably – analytically if not in the markets – the preliminary October reading of University of Michigan Consumer Confidence jumped six points to the high since January 2004. Or taking a slightly different view, Consumer Confidence has been stronger for only one month in the past 17 years. Current Conditions rose to the highest level since November 2000.
Data notwithstanding, from Bloomberg: ‘Bond Shorts Experience the Agony of Defeat Yet Again.’ Ten-year Treasury yields declined nine bps this week to 2.27%, though I’m not sure this qualifies as a ‘defeat.’ In stark contrast to the fanatical gathering on the opposing side of the field, not a single central banker was spotted on the bond bears’ sideline.

This post was published at Wall Street Examiner by Doug Noland ‘ October 14, 2017.

Remember This Friday The 13th – Americans Are More Optimistic About The Stock Market Than They Have Ever Been Before

Happy days are here again for the U. S. economy – at least temporarily. On Friday, U. S. stocks hit another brand new record high. It seems like we are saying that almost every day lately, and most investors are absolutely thrilled by this seemingly endless surge. Global stocks are surging too – today world stocks hit a new record high for the 4th consecutive day in a row. But of course it isn’t just stock prices that are rising. As the week ended, pretty much everything was up, and we also got some good news about consumer sentiment. According to the new University of Michigan survey that was just released, U. S. consumers are the most optimistic about the economy that they have been since 2004…
The consumer sentiment index, a survey of consumers by The University of Michigan, rose to 101.1 in October, far ahead of the 95 economists polled by Reuters anticipated.
‘Consumer sentiment surged in early October, reaching its highest level since the start of 2004,’ Richard Curtin, chief economist for the Surveys of Consumers, said in a statement.
And according to that same survey, we have never been more confident that the stock market will continue to go up than we are right now…
Americans have never been more confident that that stock market will rally further in the next 12 months…

This post was published at The Economic Collapse Blog on October 13th, 2017.

Consumer Sentiment Surges to Highest Level in 13 Years

The University of Michigan Preliminary Consumer Sentiment for October came in at 101.1, up 6.0 from the September Final reading of 95.1 and its highest since 2004. had forecast 95.1.
Surveys of Consumers chief economist, Richard Curtin, makes the following comments:
Consumer sentiment surged in early October, reaching its highest level since the start of 2004. The October gain was broadly shared, occurring among all age and income subgroups and across all partisan viewpoints. The data indicate a robust outlook for consumer spending that extends the current expansion to at least mid 2018, which would mark the 2nd longest expansion since the mid 1800’s. While the early October surge indicates greater optimism about the future course of the economy, it also reflects an unmistakable sense among consumers that economic prospects are now about as good as could be expected. This “as good as it gets” outlook is supported by a moderation in the expected pace of growth in both personal finances and the overall economy, accompanied by a growing sense that, even with this moderation, it would still mean the continuation of good economic times. Although such an outlook is typically recorded in the late phase of an expansion, its occurrence is independent of the ultimate length of an expansion. Indeed, nothing in the latest survey indicates that consumers anticipate an economic downturn anytime soon – which contrarians may consider a clear warning sign of trouble ahead. Nonetheless, consumers anticipate low unemployment, low inflation, small increases in interest rates, and most importantly, modest income gains in the year ahead. It is this acceptance of lackluster growth rates in personal income and in the overall economy that signifies that consumers have accepted, however reluctantly, limits on the pace of improving prospects for living standards.

This post was published at FinancialSense on 10/13/2017.

“Most Hated” Rally Getting Record Love

A recent reading in one broad measure of consumer stock market sentiment was among the most bullish in history.
Perma-bulls like to label this bull market the ‘most hated’ in history. While the rally is historic by some metrics, the ‘most hated’ status, to the degree that it was ever applicable, has certainly fallen by the wayside by now. To be sure, there are plenty of vocal and visible perma-bears that have been spewing copious amounts of ‘hate’ at this rally for years now. However, if one steps away from the confines of financial social media and guru-dom, evidence shows that public sentiment has grown to now reflect among the most bullish conditions in recorded history.
While there hasn’t been a flashy, parabolic melt-up sucking up investor capital, it’s likely that the sheer duration and overall magnitude of the bull market has had a cumulative effect on investor sentiment. One example comes from our Chart Of The Day based on the University of Michigan’s Survey of Consumers. One of the questions asked of respondents in the survey is their estimation of the ‘probability of an increase in the stock market in the next year’. Among the various ways that UM breaks down the data is by taking the mean response to that question. And in August’s survey, the mean response came in at 62.7%.

This post was published at Zero Hedge on Oct 6, 2017.

Lord Acton on the Meaning of Freedom

‘Power tends to corrupt and absolute power corrupts absolutely.’
Many Americans can identify the author as Lord Acton. But that is about all they know about John Emerich Edward Dalberg Acton – First Baron Acton of Aldenham. That is a pity, because, according to Stephen Tonsor, Professor Emeritus of History at the University of Michigan, Acton was both ‘the most knowledgeable foreign observer of American affairs in the nineteenth century,’ and deeply concerned about ‘the threat to freedom from centralized governmental absolutism, the tyranny of the majority, bureaucratic administration, democracy and socialism,’ threats which have hardly been vanquished today.
It is worth remembering more of Lord Acton than his most famous quote. After all, as his Acton Institute biography states, ‘he was considered one of the most learned people of his age, unmatched for the breadth, depth, and humanity of his knowledge,’ and ‘became known as one of the most articulate defenders of religious and political freedom’ in the 19th century.
At all times sincere friends of freedom have been rare…
In every age [liberty’s] progress has been beset by its natural enemies: by ignorance and superstition, by lust of conquest and by love of ease, by the strong man’s craving for power, and the poor man’s craving for food.
By liberty I mean the assurance that every man shall be protected in doing what he believes is his duty, against the influence of authority and majorities, custom and opinion.

This post was published at Mises Canada on OCTOBER 4, 2017.

UMich Consumer Confidence Slides On Loss Of ‘Hope’

University of Michigan’s headline consumer confidence index slipped lower in Septemeber (prelim) from 96.8 to 95.3 driven by a tumble in ‘expectations’ that offset a burst in ‘current conditions’ to its highest since Nov 2000!
As Bloomberg reports, the figures are the first to broadly capture the effects of Harvey and Irma, which caused more than $100 billion in damage and sparked a jump in claims for unemployment benefits. According to the survey, 9 percent of respondents spontaneously said the storms would hurt the economy. The sentiment index was unchanged among consumers who didn’t mention the storms.
Across all interviews in early September, 9% spontaneously mentioned concerns that Harvey, Irma, or both, would have a negative impact on the overall economy.

This post was published at Zero Hedge on Sep 15, 2017.

Whip It! Univ of Michigan Inflation Remains Unchanged at 2.6% (But Declines To 2.5% For 5-10 Yr Ahead)

This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
The University of Michigan survey of consumers just released their montly update on inflation expectations. If only The Fed’s Janet Yellen was watching consumer inflation expectations because consumers expect more inflation than The Fed’s inflation target of 2%. Apparently, The Fed is having trouble whipping inflation above 2%.
Consumer inflation expectations remained at 2.6% for August, but the expectations for inflation down the road fell to 2.5%.

This post was published at Wall Street Examiner by Anthony B Sanders ‘ August 18, 2017.

Shocking Footage Of Saudi Siege Against Own Citizens

The Saudi regime is in the midst of an extreme and brutal crackdown against its own citizenry in the country’s Eastern province – a situation now spiraling out of control with rising civilian deaths, entire neighborhoods turned to rubble, and new reports that water and electricity have been cut to the now completely besieged town of Al-Awamiya. Though local activists continue to upload shocking ground level videos to social media revealing that entire districts have been leveled, international and US media have remained largely silent.
Tensions have been simmering in the heavily Shia populated Qatif governate throughout the past year, especially after the January execution of prominent Shia cleric and Al-Awamiya native Nimr al-Nimr. Additionally, 14 Shia citizens, among them young Mujtaba al-Sweikat – a student enrolled at Western Michigan University – currently await execution upon the signature of King Salman. The torture and mass trial of the group, charged with “protest-related” crimes has further inflamed tensions in the region. Large protests against the Saudi monarchy and security services have been frequent in Qatif going all the way back to the start of the so-called “Arab Spring” – though major international media outlets have tended to ignore such protests occurring under US/UK friendly regimes.

This post was published at Zero Hedge on Aug 4, 2017.

Half Of Detroit’s Mayoral Candidates Are Felons

Will voters in one of the most crime-ridden cities in the country be able to stomach voting for a convicted felon? Residents of Detroit are about to find out. Half of the candidates running in next Tuesday’s mayoral primary – the first since the city emerged from Bankruptcy protection in 2014 – have felony convictions on their records, according to an analysis of criminal records by the Detroit News.
In what we must admit is a masterful attempt at spin, one political operative said the felony convictions make the candidates more relatable because they show the candidates have each “lived a little.”
‘Black marks on your record show you have lived a little and have overcome some challenges,’ said Bowens, a former press secretary to Detroit Mayor Dennis Archer and NAACP activist. ‘They (candidates) deserve the opportunity to be heard, but they also deserve to have the kind of scrutiny that comes along with trying to get an important elected position.’
Michigan election law stipulates that convicted felons can vote and run for office as long as they are not incarcerated or guilty of certain fraud-related offenses, or crimes involving a breach of the public trust. The top two finishers in the primary will go on to face off against incumbent mayor Mike Duggan, who is running for reelection. Duggan has received endorsements from a host of powerful unions, including the Detroit Metro AFL-CIO and the powerful public employees’ union AFSCME.

This post was published at Zero Hedge on Aug 3, 2017.

Chevy Forced To Extend Shutdown Of Bolt Plant After Realizing That Literally No One Wants A Bolt

General Motors launched it’s much-hyped, all electric Chevy Bolt at the end of 2016. The Bolt was expected to make a splash as it was the first electric car in the U. S. market to offer 200 miles of driving range at an affordable price starting around $35,000. The only problem is that pretty much no one seems to want one.
Unfortunately, that lack of demand is about to earn a bunch of UAW workers at GM’s Orion, Michigan plant an extended summer vacation.
As AOL Finance points out today, GM has managed to sell just over 7,500 Chevy Bolts through the first six months of 2017. Moreover, since dealers are sitting on about 111 days worth of inventory, we’re going to go out on a limb and say the Bolt launch slightly underperformed expectations. All of which has resulted in GM’s decision to extend the shutdown currently in effect at it’s Orion plant for just a little while longer.
General Motors Co has extended a shutdown at the Michigan factory that builds the new Chevrolet Bolt electric car as part of a broader effort to get control of bulging inventories of unsold vehicles in the United States.
“Shutdown periods vary by plant based on launch timing of new or refreshed models across the portfolio and our ongoing efforts to align production with market demand,” GM said in a statement.

This post was published at Zero Hedge on Jul 18, 2017.

Amazon Drives Discount Double Check in Retail Industry

Our offices are located on Michigan Avenue, otherwise known in colloquial terms as “The Magnificent Mile,” which is paved with one retailer after the next. You can find Ulta; you can find Nike; you can find Gucci; you can find Crate & Barrel; you can find Gap, Nordstrom, Ralph Lauren, Tiffany & Co., and the list goes on and on.
Oh, and you can also find lots of “sale” signs.
What we see in terms of “sale” signs on Michigan Avenue is probably no different from what readers see in their own shopping districts and/or malls these days. Many brick and mortar retailers, and especially the apparel and accessories retailers, are hurting for traffic as consumers have increasingly embraced e-commerce for their spending activity, partly because it is convenient, partly because it takes less effort, but mostly because that’s where lower prices can be found.
The fact of the matter in the apparel and accessories world, where true differentiation and competitive moats are hard to come by, is that full-price selling doesn’t sell for the average consumer. What sells as a traffic driver are big discounts.
Amazon, in effect, is ruling the retail universe with an invisible hand and retailers have no choice but to perfect an operating strategy that combats Amazon’s ever-present, always-on, competitive threat.

This post was published at FinancialSense on 07/17/2017.

Caitlyn Jenner Is Exploring A Senate Run

Earlier this week, Kid Rock announced that he’s exploring a senate bid in his home state of Michigan, energizing conservative activists who believe Rock – real name Robert James Ritchie – would easily defeat incumbent Democrat Debbie Stabenow and go on to become the first Republican to hold her seat since 1998.
But Rock isn’t the only celebrity who will be seeking a senate seat during the 2018 cycle: Olympic gold medalist and transgender activist Caitlyn Jenner has revealed during an interview with radio host John Catsimatidis that she has considered launching a run for Senate, and that she is in the process of determining her future in activism and politics, according to the Hill.
The term of Dianne Feinstein, the senior senator from California and, at 84, the longest-serving US senator, is up in 2018, and there’s speculation that she may not run again, given her age.

This post was published at Zero Hedge on Jul 16, 2017.

“Stocks Are About To Make Dudley, Fischer, And Yellen Extremely Nervous”

Stocks Dare The Fed
It was only a month ago Fed President Dudley was lecturing us about the dangers of overly easy financial conditions and how inflation’s sanguine performance was ‘transitory.’ And it wasn’t like he was alone. The Fed’s generally accepted second in command, Stanley Fischer, echoed similar comments.
Well, on Friday morning about the most awkward economic news possible was released. CPI undershot, coming in at 1.6% instead of the expected 1.7%. Retail sales were abysmal, registering -0.2% instead of the forecasted 0.1% gain. And the University of Michigan sentiment numbers reflected a public who is becoming increasingly skeptical of the Fed’s rosy outlook. The actual index was 93.1 instead of the surveyed 95.0, but more importantly, expectations plumetted to 80.2 instead of 84.4.

This post was published at Zero Hedge on Jul 15, 2017.

Sentiment Survey: Hopes for Trump-Led Growth ‘Have Largely Vanished’

The University of Michigan Preliminary Consumer Sentiment for July came in at 93.1, down from the June Final reading of 95.1. had forecast 95.0.
Surveys of Consumers chief economist, Richard Curtin, makes the following comments:
Confidence in future economic prospects continued to slide in early July, with the Expectations Index now 10.1 Index points below its January 2017 peak. In contrast, consumers’ assessments of current economic conditions regained the March 2017 peak, the highest level since the July 2005 survey. Overall, the recent data follow the same pattern repeatedly recorded around past cyclical peaks: expectations start to post significant declines while assessments of current economic conditions continue to reach new peaks. To be sure, the data do not suggest an impending recession. Rather, the data indicate that hopes for a prolonged period of 3% GDP growth sparked by Trump’s victory have largely vanished, aside from a temporary snap back expected in the 2nd quarter. The declines recorded are now consistent with just above 2% GDP growth in 2017. Much steeper declines in expectations typically precede recessions. The weakness in the Expectations Index in early July was concentrated among Republicans (falling to 108.9 from June’s 116.0 and February’s 120.1); Democrats continue to hold much less favorable expectations, although the Expectations Index among Democrats has markedly improved (to 63.2 from June’s 62.0 in June and 55.5 in February). Overall, the data indicate an annual gain of 2.4% in personal consumption during 2017. [More…]

This post was published at FinancialSense on 07/14/2017.