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Advisors Optimistic in Late 2012; Consumers Downbeat

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Advisors and consumers revealed different views on where the economy and markets are headed in December, for the second month in a row.

The Advisor Confidence Index, released by Rydex AdvisorBenchmarking on Monday, showed that advisor confidence increased significantly in December. It rose more than 18% from 85 in November’s to hit nearly 101 for the final month of 2012.  

Meanwhile, the Conference Board’s Consumer Confidence Index dropped to about 65 this month from a downwardly revised 71.5 in November, the group said early Thursday. Economists polled by Reuters had expected a rosier reading of 70.

“Consumers’ expectations retreated sharply in December, resulting in a decline in the overall index,” said Lynn Franco, director of economic indicators at the Conference Board, in a statement. “The sudden turnaround was most likely caused by uncertainty surrounding the oncoming fiscal cliff.”

Advisors, though, are more upbeat as they look at the year ahead, according to some views shared with Rydex AdvisorBenchmarking.

“Seasonal forces should carry the market higher into April and May of next year,” said Kenny Landgraf of Kenjol Capital Management, in a press release. He believes we are nearing the end of the selling wave.

“In addition to that, some deal coming out regarding the fiscal cliff and the market will move higher for the short term into the spring,” Landgraf explained.

All four components of the advisor-focused benchmark improved in December: the current economic outlook rose 10.53%, the six-month economic outlook ticked up16.31%, the12-month economic outlook increased 8.96%, and the stock market outlook had a sizable jump of 39.18%.

Consumer Conundrum

Despite the overall drop in consumer sentiment, the latest Conference Board poll found that consumers are slightly more optimistic about current business conditions and hiring than in November, which may reflect—in part—the influence of lower gas prices.

Nonetheless, their outlook for the next six months deteriorated to its lowest level since 2011. But, at the same time, the tally of consumers’ view on the present situation increased to nearly 63 from 54.

“While consumers are quite negative about the short-term outlook, they are more upbeat than last month about current business and labor market conditions,” Franco said in a statement.

In a separate survey put out last week by the University of Michigan, consumer confidence fell in December to a five-month low.

The Conference Board index hit an all-time low of 25.3 in February 2009 and was last at 90, the level that is consistent with a healthy economy, in December 2007.


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