April 27, 2010

Consumers, Investors, and Advisors Show Different Confidence Levels

Confidence reports from The Conference Board, State Street, and Rydex|SGI show feelings are up, down, and in-between

According to a trio of confidence index reports issued in the last week of April, consumers are feeling progressively better, investors are bit more pessimistic and advisors feelings remain unchanged.

The Conference Board Consumer Confidence Index, which had rebounded in March, moved even further forward in April. The Index now stands at 57.9 (1985=100), up from 52.3 in March. The Conference Board's Present Situation Index increased to 28.6 from 25.2, while the Expectations Index improved to 77.4 from 70.4.

"Consumer confidence, which had rebounded in March, gained further ground in April," said Lynn Franco, director of the Conference Board Consumer Research Center, in a statement announcing the latest results, adding that the index is now at its highest reading since September 2008 (61.4).

The number of consumers claiming conditions are "good" increased to 9.1% from 8.5%, while those claiming business conditions are "bad" declined to 40.2% from 42.1%. Consumers' appraisal of the labor market also improved. Those saying jobs are "plentiful" increased to 4.8% from 4.0%, while those saying jobs are "hard to get" decreased to 45.0% from 46.3%.

The outlook however, isn't quite so rosy among investors. The State Street Investor Confidence Index for March 2010, released on April 27, fell 7.7 points from March's revised reading of 107.4. According to a release from State Street Global Markets, declines in sentiment in North America were a key contributor, with institutional investor confidence falling 6.7 points to 103.7. Confidence was also lower among Asian investors, falling 6.5 points from 100.7 to 94.2, while in Europe the confidence reading rose 1.2 points to 95.9.

The State Street Investor Confidence Index measures investor confidence on a quantitative basis by analysing the actual buying and selling patterns of institutional investors. The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher the risk appetite or confidence level. It is based on actual trades rather than survey data.

Finally, advisor confidence in the economy and the stock market remained about the same as in the previous month, according to Rydex|SGI AdvisorBenchmarking. The Advisor Confidence Index (ACI)--a benchmark that gauges advisor views on the economy and stock market--was 108.08 in April, down 0.46% from 108.59 in March.
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