High frequency economic releases have generally been coming in a bit on the soft side, but the signs point to a cautiously optimistic outlook for the American consumer. First, there is the improving employment picture. As well, falling gasoline prices should so provide a boost to consumer spending.
As a result, a number of analysts have been bullish on consumer spending. New Deal democrat got somewhat excited over the tick up in Gallup`s rolling poll.
As well, Doug Short has indicated that the recent disappointing retail sales figures may be attributable to winter weather. The Atlanta Fed has also suggested that we are seeing a bout of seasonal softness in the Q1 growth statistics.
Mr. Market doesn't seem to be buying into the consumer revival theme. Here is a chart of the relative performance of consumer discretionary stocks against the SPX, along with a number of key consumer spending related industries. In all cases, relative performance seems to be rolling over and I see broken relative uptrends everywhere.
There is a disconnect here between macro and technical market expectations. Someone is going to be proven very wrong.
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