Economics: It's All How You Spin It
We’re not surprised to see an indecisive market today. Not only do traders have to decide the fate of this long-long-running bear market rally, but there’s a cacophony of economic data squawking around this morning. Roll the videotape:
Good news… Looks like home prices are on the mend, eh? S&P reports that its home price index improved in August for the seventh month in a row. The headline chart has a nice look to it. At face value, home prices appear to be soaring up as violently as they crashed. But as with all things economic… It’s all how you spin it.
Oh…bummer. The same index simply plotted against time and its month-to-month value tells basically the same story it’s been telling all year: Unless you bought your home before 2003, chances are it’s worth less today.
Kind of hard to dispense a bunch of “conviction buy” ratings with that in mind.
The latest consumer confidence details offer a similar perspective. The Conference Board reported this morning that its index of consumer confidence declined just a bit thus far in October, from 53 to 47. That’s not great news for the Street even at face value, as the consensus was looking for a very small improvement.
The fine print, unfortunately, doesn’t offer any silver lining. In fact, check this out:
The Conference’s Board’s gauge of consumption attitudes is supported by two subindexes: one that gauges how people feel about the present situation and one that somehow charts its future expectations. The present index, aka the only one worth trusting (if the crowd was any good at seeing what was coming… well… we wouldn’t be in business) just hit a score of 20.7. That’s the lowest it’s been throughout this entire crisis. In fact, you’d have to go back 26 years for a score that low.