SENTIMENT INDICATOR OF FULL TIME WORKERS AT HIGHEST LEVEL IN 16 YEARS

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By: Kent Engelke | Capitol Securities

Consumer comfort rose to an almost 10-year high in the final week of February on increased optimism about the economy and more favorable views about personal finances and the buying climate according to Bloomberg Consumer Comfort Index. The index rose to the highest level since March 2007.

The gauge has increased in four of the past five weeks. Its gauge of “economic views” is also at the highest level since March 2007.

Perhaps most significant is the gauge measuring the sentiment of full time workers. The gauge is at the highest level in 16 years.

The accepted reason for this surge is the election of Trump and his plans for a smaller government, plans to reduce taxes and regulations, all of which to spur growth.

Wow! I must write this is not a one off survey, but is consistent with those since the election and the inauguration. To make the obvious observation, these consistent surveys do not correlate to the approval surveys.

Several weeks ago, I opined the political environment will become even more vitriolic. Unfortunately, this has come to pass. Will society begin to view Washington as only noise? The answer is dependent upon the economy.

President Obama was “well liked” and had modest approval levels. President Trump has neither, but if these “animal spirits” are being released as the sentiment surveys are perhaps suggesting, he might be viewed as Pattonesque, the abrasive WWII general who was instrumental in the victory of Germany.

General Patton was not well liked by the establishment, was constantly reprimanded, but accomplished a mission that few had the qualities to accomplish. His men loved him, but no one else.

Commenting about yesterday’s market activity, averages were modestly lower. Will the averages reverse their strong gains since the election because of monetary policy concerns? Fed funds futures are now suggesting a 88% probability of a change in interest rates at its March meeting up from about 40% at the end of last week.

The odds jumped following several Fed officials who echoed a more hawkish view. Moreover, last week’s jobless claims fell to the lowest level since March 1973. This week’s decline was the largest of the year indicating that employers are keeping dismissals at a minimum as demand remains steady.

Last night, the foreign markets were down. London was down 0.17%, Paris up 0.67% and Frankfurt down 0.02%. China was down 0.36%, Japan down 0.49% and Hang Sang down 0.74%.

The Dow should open flat. Yellen speaks today in Chicago about the economic outlook. The 10-year is off 6/32 to yield 2.50%.

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