Individual Investors Far From Overly Bullish

If readers glean one item from today's release of the American Association of Individual Investors'  Sentiment Survey release, investors are far from bullish. With sentiment measures being contrarian ones, all else being equal, this is a positive for the equity market. This week's survey saw the bullishness reading declined a little over four percentage points to 29.4% with most of this difference moving to the bearish reading, i.e., up over five percentage points.

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The Unknowns Can Derail Past Conclusions

An important factor associated with writing blog content is it serves as a written record of one's thinking at certain points in time. It is often beneficial to go back and review one's thoughts and conclusions at these various points in time. If the conclusions that are drawn from one's writings turn out to be different than what was expected, understanding why is important going forward.

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Data Around Jobs Suggests Continued Economic Growth

The NFIB Small Business Optimism Index released this morning was largely a positive report in my view with the Index reported at 103.1, but down 1.6 points. The Index level remains in the top 15% of readings for the Optimism Index. Where the report shows weakness it is mostly in the expectations areas. For example, the survey notes, "optimism slipped because fewer owners said they expect [emphasis added] better business conditions and real sales volumes in the coming months." Related to expectations was NFIB President and CEO, Juanita Duggan expressing in the report,

"In spite of the success we continue to see on Main Street, the manic predictions of recession are having a psychological effect and creating uncertainty for small business owners throughout the country. Small business owners continue to invest, grow, and hire at historically high levels, and we see no indication of a coming recession."

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Recession Talk Again

It seems much of the discussion and commentary recently is focused on an imminent recession partly precipitated by the consequence of an inverted yield curve. The recent recession chatter reminded me of an article I wrote a little over two years about a recession forecast and market bubble that was headline news in 2012. Yes, recession talk was headline news in 2012. The article included a table similar to the one below.

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Diverging Confidence Reports, But Favorable Employment Environment

Two reports on consumer confidence were reported last week with The Conference Board's report early in the week. Continued strength was evident in the Conference Board's report with the reading coming in at a near record high for this expansion of 135.1. The reading exceeded the high end of the expectations range of 133. Then at the end of the week, the University of Michigan report on consumer sentiment was reported at 89.8 and came in lower than the low end of the expectation range of 92.0. This data is an another mixed data point on the economy that I touched on late last month.

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