"Such steep and widespread declines in confidence have
typically triggered recessions," though a recession is not
"pre-ordained," said Richard Curtin, the director of U Mich consumer
surveys. The drop paralleled the decline following Iraq’s invasion of Kuwait in
U Michigan Sentiment Index Gives Market Warning
click for larger chart
Source: Robert McHugh
Some Traders find a correlation between consumer sentiment
and Dow Industrials’ price movements. Robert McHugh states that “often, the sentiment index and equity prices move
contemporaneously, so we do not benefit from foresight. On occasion, we do get
an early warning as the sentiment index leads prices.” We will see if this
recent drop presages another.
Quote of the Day:
"Any activity becomes creative when
the doer cares about doing it right, or better."