The Bulls have Faith in President Trump and the American Consumer

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Bulls are convinced President Trump, the American consumer and the stock market are going to hold up fine, as politicians appear increasingly likely, approve another round of fiscal stimulus before next month’s elections.

House Speaker Nancy Pelosi (D-CA) said Sunday that few differences remained with President Trump’s administration on a wide-ranging virus relief package and she is optimistic legislation could be pushed through before Election Day.

President Trump told reporters in Nevada: “I think Nancy Pelosi maybe is coming along. We’ll find out.

I want to do it at a bigger number than she wants. That doesn’t mean all the Republicans agree with me, but I think they will in the end,” he said.

Investors looking for comfort can point to retail sales and the latest readings on consumer confidence.

Bulls cheered Friday on data that showed September retail sales rose by 1.9%, far surpassing the 0.7% consensus forecast produced by a Dow Jones Newswires survey of economists.

On Top of that, the preliminary reading of the University of Michigan’s consumer sentiment index (MSI) edged up to 81.2 this month from 80.4 in September, the highest since March.

Important to note that the U.S. consumer confidence increased in early October, signaling some consumers remain optimistic about the economy despite slowing jobs growth, rising COVID-19 cases, and the lack of more aid. However, the latter might be enhanced if what Nancy Pelosi stated in a recent interview is that a new stimulus package might be concluded before Election Day and more importantly the coming Holiday Season..

While the gauge of current conditions fell from 87.8 to 84.9 due to concern about these factors, “those concerns were largely offset by continued small gains in economic prospects for the year ahead,” according to Surveys of Consumers Chief Economist Richard Curtin.

Why is this so important?

Consumer confidence data is an extremely important leading indicator for investors given its ability to predict consumer-spending patterns. These spending patterns can be useful predictors of everything from gross domestic product (GDP) growth to the effectiveness of monetary policy in combatting low unemployment and inflation.Important to note that The University of Michigan reported consumer confidence hit a seven-month high in its early October survey. The Consumer Sentiment Index (CSI) climbed to a reading of 81.2, up from late September’s reading of 80.4. If as Nancy Pelosi just said that a new stimulus package looks favorable before Election Day, then this Index should rise for the coming Holiday Season.

Also of note is that e-Commerce sales are predicted to grow by 25% to 35%, year-over-year, during the 2020-2021 holiday season, compared to sales increasing by 14.7% in 2019, according to Deloitte’s annual holiday retail forecast. E-commerce holiday sales are expected to generate between $182 billion and $196 billion this season. 

So, the Bears might have to replace their sad faces and instead start smiling if all predictions become a reality. Personally I think the coming Season will be more positive than negative and the Bulls will win,” says economist Bruce WD Barren.

Have a healthy week, Keep the Faith!

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Paul Ebeling

Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.   
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