Investors Be Investin’ 💰

by 27 Aug, 2020

Investors Be Investin’

A stock market at all-time highs only tells one side of a complicated story. In the search for more predictive signals about the future, enterprising investors are venturing deep into economic data. It seems we’ve unearthed something interesting about consumer confidence:

Normally, consumers spend more as asset prices rise (be it the stock market or the housing market), and this is called the ‘wealth effect.’ But the Conference Board’s latest consumer confidence survey reveals conviction in spending sliding backwards.

It only makes sense for consumers to spend more when asset prices go up if consumers own assets, but wealth inequality is the argument against that being true, and for this low confidence print.

What can’t be denied, however, is that consumer confidence isn’t the same as real consumer spending, and those are figures we’re still waiting for. The conviction in chief executives who can front run that data is, interestingly, climbing quite fast. Maybe morale is down, that’s all.

The glummest developments around the world only relate to the stock market in so far as their material effect on companies’ profits. If the virus is controlled, investors will ignore it… and the rioting, and the looting, and the aliens, and whoever’s discharging government…  

Investors be investin’!

I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.

 

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