Consumer confidence hits 4-month low

U.S. consumer confidence fell to its lowest in 4 months in August on worries over high unemployment & dismal personal finances, though the mood managed to improve from earlier this month, a survey showed. The Reuters/U of MI Surveys of Consumers said its final index of confidence for August fell to 65.7 from 66.0 in July. That was the lowest since 65.1 in April but above economists' expectations for 64.5 & also higher than this month's preliminary reading of 63.2. Consumers rated the current economic conditions the worst since March, when the stock market hit 12-yr lows. This index fell to 66.6 from July's 70.5. This was also an improvement from 64.9 early in Aug. Consumers' one-year inflation expectations fell to 2.8% from July's 2.9%. 5-year inflation expectations also fell to 2.8% from July's 3.0%. "Consumer pessimism was at its worst early in August, but now turned around. This is the final report for August so the market is not only going to look at the headline print, but the fact that the print in the 2nd half of the month showed you have reversed the bulk of the June to Aug decline. So that's good news. "That said, the market is still very skeptical you're going to get very big inventory bounce backed up by stronger consumer spending later this year. How can consumer sentiment be showing any sort of robust trend line to upside? It would totally discredit the consumer if they haven't already discredited themself. The market is getting nervous because it's at such lofty levels." "My biggest fear is it doesn't matter how optimistic consumers are if they don't have jobs or money to spend. We saw data that said personal income was flat. Spending is probably coming on credit & that's scary. I think Sept's going to give us a smack down from the risk play. "What I call a dash for trash in the stock market will have to end. We've run so far, so fast, it's not a matter of if, it's a matter of when we see a good-sized correction. I think the dollar will come back strong as a safe-haven play." "It's not too bad. They improved from the preliminary readings. People are still optimistic about the future. "This tells me consumers are still in rebuilding phase. Investors still have be worried about sustainability of the recovery. It's clear to me we can't count on growth through next year as long as consumers are still on ropes. The market was up earlier, we got a bounce off personal income, but now the Dow turned around on sentiment data. That suggests a bit of buying exhaustion. Yesterday we had a big rally off the lows but we can't hold that. We're getting set up for a consolidation period. "The fact we moved down on positive news isn't a bullish sign. But lately we've had a lot of mixed reactions to news. The market will rally on bearish data or fall on bullish news. There's a lot of indecision in the market. I think a lot of people are waiting for a pullback."