Consumer confidence, inflation

Market volatility, the ups and downs, are strongly rooted in the confidence of households, regarding their future employment and financial prospects, which is why we track these measures globally.

Note the University of Michigan consumer confidence survey, relative to everything else, including the conference board one. Shockingly bad.

Now, in markets, you pick your numbers and narrative. If you subscribe to UM-C, boy are you bearish, and likely accordingly positioned.

A number one issue for voters, and thus consumers, is inflation, and whether wages are rising faster than the cost of living. It’s hard to be confident if your real purchasing power is eroding. Here’s the data, as a reminder ahead of tonight’s CPI print.

The bond market, for what it’s worth, is still very much in the transitory camp, despite the run in the 10 year yield.

Else, it would be much higher….

We remain in the transitory camp, with the magic of markets to unwind supply bottlenecks, over time, and there is encouraging data from global freight rates, increased truck availability, and decreased shipping container costs, but tonight’s print should still see the effects of global supply chain ructions associated with the war, and as such is pretty cloudy, in terms of our expectations.

And that’s before thinking through the China lockdowns, which is a whole new spanner in the works. Despite being critical for global supply chains, we think the likely drop in commodity demand from China, associated with Covid, could outweigh the costs associated with delays, shortages and otherwise greater inefficiencies.

Important Information: This document has been prepared by Aequitas Investment Partners ABN 92 644 165 266 (“Aequitas”, “our”, “we”), a Corporate Authorised Representative (no. 1284389) of C2 Financial Services, (Australian Financial Services Licensee no. 502171), and is for distribution within Australia to wholesale clients and financial advisers only.

This document is based on information available at the time of publishing, information which we believe is correct and any opinions, conclusions or forecasts are reasonably held or made as at the time of its compilation, but no warranty is made as to its accuracy, reliability or completeness. To the extent permitted by law, neither Aequitas nor any of its affiliates accept liability to any person for loss or damage arising from the use of the information herein.

Please note that past performance is not a reliable indicator of future performance.

General Advice Warning: This document has been prepared without taking into account your objectives, financial situation or needs, and therefore you should consider its appropriateness, having regard to your objectives, financial situation and needs. Before making any decision about whether to acquire a financial product, you should obtain and read the relevant Product Disclosure Statement (PDS) or Investor Directed Portfolio Service Guide (IDPS Guide) and consider talking to a financial adviser.

Taxation warning: Any taxation considerations are general and based on present taxation laws and may be subject to change. Aequitas is not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and investors should seek tax advice from a registered tax agent or a registered tax (financial) adviser if they intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.

Receive our investment insights

Something went wrong. Please check your entries and try again.