Pre-Market Plan [9/25]: U.S. Consumer Confidence falls to 81.7 - just above Recession Threshold
Good Morning -
I want to share the headline info for Consumer Confidence data released yesterday, which came in at 81.7 - marginally above the 80 level threshold that the Conference Board suggests is a toggle between economic growth and recession.
Much of the deterioration in the consumer confidence index was related to expectations regarding the labor market.
On the bright side, Conference Board reported that “on a six-month moving average basis, purchasing plans for homes and new cars improved slightly. And when asked about plans to buy more goods or services over the next six months, consumers showed a slightly greater preference for purchasing goods”.
You can read the full consumer confidence report here.
It now appears that the Fed’s 50BP interest rate cut was appropriate given increasing concerns around the labor market.
Yesterday, if it weren’t for the Hang Seng’s (HSI) overnight carried strength from China stimulus, the Consumer Confidence data could have had the potential to create more volatility in U.S. markets. Markets dipped immediately after data was released and was shortly snapped up higher.
Our view given to Members yesterday before the opening bell was that a strong HSI is generally a correlated to firmer U.S. markets. No significant weakness is likely in SPX or Nasdaq with such strength in HSI was our opinion.
The U.S. market is now in search of more catalysts to sustain recent momentum. We think the next catalyst comes from Micron’s earnings tonight.
The market can and will do anything it wants in the short-term, making it difficult to know what post-earnings reactions will be. But on longer-timeframes, Micron is undervalued based on our modeling.
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