All of a sudden, everyone seems to be bearish on oil and bullish on its implications for the economy. That’s fine with me since I started to speculate about a big downside move in the price of a barrel of Brent crude oil to $75 in mid-September. It was around $95 back then. On Monday, with the price around $85, I discussed some reasons why it might not have much more downside. Lower prices might be even too painful for the Saudis, who might reduce their output. The Chinese have been bargain hunting at these prices.
In any event, the drop in the price of gasoline and heating oil is a nice and early holiday present that could boost holiday retail sales. The national average pump price of gasoline has dropped 53 cents from this year’s peak of $3.70 a gallon during the week of July 2 to $3.17 in mid-October. The futures price suggests it will fall below $3.00 in the next couple of weeks.
That’s certainly helping to boost the Consumer Confidence Index. I average it with the Consumer Sentiment Index to derive our Consumer Optimism Index. My derived index rose during October to the highest reading since September 2007.
Interestingly, the Consumer Confidence Index among respondents under 35 years old soared during October to the highest since December 2006. This group’s confidence typically exceeds that of the older groups. I’m not sure why it surged so much for the younger crowd. Maybe they drive more. Maybe they are happier than others that jobs are less hard to find. In any event, they tend to form households. They buy houses, furniture, and cars, especially when they are optimistic.
Today's Morning Briefing: Considerable Time. (1) FOMC likely to treat rather than trick. (2) Fed officials were probably spooked by recent market turmoil. (3) QE has been terminated, until further notice. (4) FOMC has to fear stoking current melt-up. (5) Fed policy is market dependent. (6) Rosengren denies Fed’s role in wealth and income inequality. (7) No exit for central banks from ultra-easy monetary policy for a considerable time. (8) The “one and done” scenario. (9) Long expansion scenario would justify higher P/Es until it doesn’t. (10) Focus on market-weight-rated S&P 500 Industrials. (More for subscribers.)
In any event, the drop in the price of gasoline and heating oil is a nice and early holiday present that could boost holiday retail sales. The national average pump price of gasoline has dropped 53 cents from this year’s peak of $3.70 a gallon during the week of July 2 to $3.17 in mid-October. The futures price suggests it will fall below $3.00 in the next couple of weeks.
That’s certainly helping to boost the Consumer Confidence Index. I average it with the Consumer Sentiment Index to derive our Consumer Optimism Index. My derived index rose during October to the highest reading since September 2007.
Interestingly, the Consumer Confidence Index among respondents under 35 years old soared during October to the highest since December 2006. This group’s confidence typically exceeds that of the older groups. I’m not sure why it surged so much for the younger crowd. Maybe they drive more. Maybe they are happier than others that jobs are less hard to find. In any event, they tend to form households. They buy houses, furniture, and cars, especially when they are optimistic.
Today's Morning Briefing: Considerable Time. (1) FOMC likely to treat rather than trick. (2) Fed officials were probably spooked by recent market turmoil. (3) QE has been terminated, until further notice. (4) FOMC has to fear stoking current melt-up. (5) Fed policy is market dependent. (6) Rosengren denies Fed’s role in wealth and income inequality. (7) No exit for central banks from ultra-easy monetary policy for a considerable time. (8) The “one and done” scenario. (9) Long expansion scenario would justify higher P/Es until it doesn’t. (10) Focus on market-weight-rated S&P 500 Industrials. (More for subscribers.)
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