Will There be Aftershocks?

The last nine weeks have been tough on the spirits of America.  You can certainly see that in the recent trends of the University of Michigan Consumer Sentiment Index below, which obviously polled those that were tuned into all the political debates about spending versus cutting and saw nothing but black clouds.  I also think that you can see that these people are impacted by the action of the stock market.

Click on chart above to view larger image. Source: calculatedriskblog.com

You can really see the recent plunge in the chart above...back down even to the lows from 2008/2009.  So, the public is very worried about...the future.  So, what do you do when you are worried?  You sell your stocks, and for some reason, go SHOPPING?!

Click on chart above to view larger image. Source: calculatedriskblog.com

Retail Sales (in the chart above) have recently moved upward, and furthermore, the very important Initial Unemployment Insurance Claims (in the chart below) were down again last week - more than was expected.  I've been talking about this number a good bit lately, since I believe it is one of the most important trends and will show the escape from the economic "soft patch" of Q2.

Click on chart above to view larger image. Source: calculatedriskblog.com

Overall, if everything plays out, I believe that the action of the financial markets in the last few weeks and months...on top of the financial crisis of 2008,  and as a follow-up to the bursting of the Tech Bubble and the exposed deception of Worldcom and Enron, will be the most important factor to getting the world more competitive and more compassionate for the exciting decades ahead.


Don Hays

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