主题：03/31/2009 Market View -- 宁子

Windy City manufacturing getting blown around.

Midwest manufacturing has surpassed the 2000-2001 downturn. Chicago is showing some issues, unable to put together a couple of upside moves over the past five months. It jumped to 35.1 in December but then faltered and fell to 33.3 in January. Back up to 34.2 in February only to report Tuesday a tumble to 31.4. That is the lowest of this cycle and indeed, a 29 year low.

Chicago is an important region and its inability to put together any sustained turn as some of the other regions have (though two improving numbers well below 50 are hardly what you would call a 'turn') raises the concern that the recent across the board improvement in economic data may just be a blip higher in a continued longer term malaise. The index is a bit volatile, i.e. bouncing up to improvement and then down to lower levels, and volatility is a sign of an attempted change. Time to show some change, however, versus just blowing back and forth in the Windy City's streets.

Consumer Despondency, f.k.a. Consumer Confidence, remains at shockingly low levels.

March confidence rose to 26.0 from an upwardly revised 25.3 (25.0 prior). Alright, confidence is waxing a bit. A couple of issues. Actually a lot more but no point in going into all of them.

First, this 26.0 reading failed to meet expectations of 28.0. It was better but it was not that much better. Second, this 0.7 move was after a 12 point dive from January to February. The 'rebound' was statistically insignificant. For reference, Confidence measured 44.7 in November, 37.4 in January, and then 25.3 in February. Massive drops to start the year even with all of the horrors that arose from September to December. Not a lot of confidence in the plans, budgets, stimulus, company governance, etc. initiatives from the new Administration. Confidence was down; no doubt about that. It has utterly crumbled, however, this year.

While you don't want to put too much stock in confidence readings given that consumers will respond to a questionnaire in one way and then act another. What you have to look at, however, is the relative position of the number itself in its historical lifespan. These levels are as low as you see. Readings in the fifties historically indicate the economy is well on the way to recession. These numbers are so low they are almost statistically meaningless. Consumers are despondent and they will stay despondent long after the economy starts to recover. Consumer sentiment readings do not lead the market; changes in sentiment tend to, ultimately, confirm the economic moves. Of course the stock market and indeed even the economy have taken off long before consumers feel confident enough in their jobs and homes to start strutting around.

So confidence sucks. Again, that is no surprise given our government is cramming trillions of dollars in spending down our throats with bills no one but the drafter has read. It is very telling that confidence imploded when the 'stimulus' bill was crammed down on us and the unknown as well as known ramifications ahead.