Consumer Confidence hits four-year low as markets churn amid economic uncertainty

• Stocks ‘eke’ out small gains as we move into the month end.

• Consumer Confidence isn’t so Confident.

• ‘Liberation Day’, Earnings and Tax Day are upon us.

• UK slashes spending due to a ‘Budget Shortfall’ caused by Rising Borrowing Costs.

• Try the Sicilian Swordfish.

One day stocks surge higher the next they ‘eke’ out a gain – the Dow up 4 pts, the S&P’s up 9, the Nasdaq gaining 84, the Russell lost 14 pts, the Transports gave up 120 pts the Equal Weighted S&P fell 19 pts while the Mag 7 added 300 pts.

This happening even as the latest economic data points to concerns that consumers are losing confidence in the economy……The latest Conference Board Consumer Confidence survey came in at 92.9! Down from 100.1 (revised) and below even the cautious expectation of 94……and this suggests growing pessimism among U.S. consumers about the economy's current state and future prospects. 92.9 marked the lowest level since January 2021 and the fourth consecutive monthly decline. This decline reflects heightened anxiety over factors like tariffs, inflation, and economic uncertainty.

Now the Present Situation Index (another measure of consumer sentiment published by the conference board), measures perceptions of current economic conditions, it fell 3.6 points to 134.5, indicating a dimming view of today’s business and labor market environment. More strikingly, the Expectations Index, which gauges short-term outlooks for income, business, and jobs, plunged 9.6 points to 65.2—its lowest in 12 years. A reading below 80 on this index often signals a potential recession looming, suggesting consumers are bracing for tougher times ahead.

This drop could imply several things: consumers might start tightening their belts, especially on big-ticket items like homes and cars (although, appliance purchases rose slightly in March) all while WMT, NKE, FDX & BBY (along with a host of others) have begun to raise the warning flag by revising (down) expectations for the 1st qtr. earnings season and beyond. Now, if households pull back, it will slow economic growth, rippling through these businesses, amplifying the recession risks. The data ‘suggests’ that the consumer is being rattled by policy shifts—like Trump’s tariffs—and broader financial pressures, even as the hard data like unemployment or manufacturing hasn’t confirmed the risk of a recession. But understand – it is a warning sign that economists and investors, traders and algo’s will watch closely.

Utilities, Staples, Healthcare, Basic Materials and Real Estate all lost ground yesterday while Tech, Industrials, Financials, Consumer Discretionary, Communications and Energy all ticked higher.

Down the chain – Homebuilders Retailers, Airlines Emerging Markets (EEM), Semi’s, Quantum Computing, Biotech’s, Big Pharma (PPH) etc.. All lost ground.

The VIX fell by 2% - which is why we saw a mixed picture…..this morning it is up 2% - suggesting that ‘churn’ that we have been discussing is alive and well.

Bonds didn’t do much…. the TLT ended the day flat, while the TLH added 0.1%.....leaving the 2-yr yielding 4%, while the 10 yr is yielding 4.31%. 12 month CD’s are yielding anywhere between 4% - 4.5% with minimums investments of $2500…. The more you commit the more they will pay you…..but remember – you are ‘locked in’ for the 12-month period otherwise you ri12-monthg a penalty.

Oil also continues to churn at $69.50…. even as we announced a ‘ceasefire’ between Russia and Ukraine in the Black Sea (that’s a positive) – leaving it just below trendline resistance at $69.70….. Remember – oil has rallied 6% since mid-March as markets were worried about supply disruptions due to sanctions on Iran and Venezuela which could result in sizeable reductions in global supply but we also know that OPEC+ (the Saudi’s) have plenty of spare capacity to mitigate any supply disruption issues…AND we also know that ‘OPEC’ (Saudi’s) want oil to be in the $70/$90 trading range rather than the $50/$60 trading range – so it is a delicate balance.

If the Saudi’s do in fact increase production – as they have said they would – we could see oil tumble to the low $60’s….which would be good for the global economy but bad for OPEC+….given that oil below $70 puts a strain on it’s members… In any event – we remain in the $66/$70 trading range. If we pierce Short Term trendline resistance at $69.70 – we run into Long Term Resistance at $70.15. Now, if we pierce that – then we could see oil challenge the February high of $73 fairly quickly with January high of $76 not far behind. Something I think will not happen. My stance is that oil trades down before it pierces trendline resistance.

Gold once again is in a very tight triangle….with support at $3050 and resistance at $3070….this morning – gold is trading at $3051……if we break support then I think we pull back to $3000 and if we push higher – then $3100 gold is not out of the question…..The next move will be driven by what happens with the VIX…..if fear rises – then expect stocks to decline and the safety trade to benefit….

US futures are a bit lower and that should not surprise you as the churning continues…. …..Dow futures are -46, S&P’s down 7, the Nasdaq down 33 while the Russell is down 4. 5745 on the S&P is the level to watch…. what was resistance is now support…..(weak as it may be).

Eco data today include Mortgage Apps, Durable Goods of -1% and Capital Goods Ordered of +0.2% and Capital Goods Shipped of +0.2%. Tomorrow is final revision to the 4th Qtr. GDP at +2.3% along with Retail & Wholesale Inventories and Pending Home Sales expected to be +1% m/m. Friday is the all-important PCE report – which is expected to be unchanged m/m and y/y…..

There are only 4 more trading days in the quarter….anything could happen…..My guess is that we will see more churn lower…..since the data is suggesting caution….there is no reason to ‘rush out’ and be an aggressive buyer….patience is a virtue. ‘Tariff Reciprocal Day’ – otherwise known as ‘liberation day’ is on April 2nd (one week away), Earnings season is just 2 weeks away with tax day just 3 weeks away….April tends to be weaker in the first half of the month – I don’t think that this trend changes this year.

European markets are lower but in a tight range as the countdown to April 2nd continues. The UK is due to announce their ‘Spring Statement’ – and the whisper number is that UK inflation is expected to be +2.8%. UK Finance Minister Rachel Reeves is also expected to announce billions of CUTS worth of spending because of a budget shortfall – caused by rising borrowing costs…think bond yields….10 yr Gilts were yielding 4.5% in November and are now yielding 4.76% today…(think what would happen here if 10 yr treasuries rise to 4.75% or 5% AND STAY THERE which is NOT out of the question).

The S&P closed at 5776 up 9 pts….Recall I said keep your eyes on 5743 as (weak) support….right now we are struggling to hold the line…but if we test and fail – then do not be surprised to see us trade down to 5650 ish….and if early April becomes more anxious – then the March low of 5500 would be the next stop. Yesterday I told you that Monday’s action created gaps in some of the indexes….that need to be filled….that means that the S&P would need to trade down to 5670 to close it…while the gap on the Nasdaq means that index would need to trade down to 17,790 (it closed at 18,271 last night).

Get comfortable by being a bit uncomfortable, stay defensive while being cautiously optimistic. 

Sicilian swordfish

For this you need: Raisins, green olives, capers, pignoli nuts (pine nuts), tomatoes, garlic, onion, s&p, olive oil and swordfish.

This dish is easy to make – it will tease your senses – and tickle your pallet – only takes about 15 or 20 mins to prepare and 20 mins to cook… enough time to set the table, pour the wine, light the candles, put on the music and dim the lights.

Preheat oven to 400 degrees (f).

Season the swordfish with S&P.

Next, soak the raisins in warm water for about 1/2 hr.… drain and set aside.

Heat the olive oil in a sauté pan on med high heat… sauté the diced onion and crushed garlic until soft. Do Not Burn. Maybe like 5 / 8 min’s… add raisins, diced tomatoes, chopped olives (no pits!), and capers – like 1 tblspn. (If you like capers feel free to add a bit more – but not too much as the taste will overpower the dish). Reduce heat to simmer and cover… stirring occasionally… for about 15 min’s or so.

Place the swordfish in a baking dish and cover the fish with the raisin/olive/caper/tomato mixture – bake for 15 min’s or until the steaks are firm.

Present the fish on a warmed plate with steamed green beans and a large mixed green salad with red onions, cucumbers, grape tomatoes, maybe some fresh mozzarella… dress with s&p, oregano, a splash of fresh lemon juice, balsamic vinegar and olive oil.