Another month, another dismal read on consumer confidence.
The Conference Board measure came in below expectations for May, with both the present and future expectations measures dropping. The University of Michigan sentiment reading has strengthened some off the recessionary lows of 2009, but is still nowhere near the 40-year average.
In other words, the headline data screams that the consumer economy is muddling along without much improvement.
Investors, however, seem to be painting their own, more optimistic tale about the economy ahead.
Despite high unemployment, debt ceiling fears, riots in Greece, earthquakes in Japan and a host of other negative headlines, most of the American consumer related stocks are doing pretty darn well lately.
Consider that heading into today the S&P 500is up 2.6 percent so far in 2011.
But look at these YTD returns:
- XLY consumer discretionary ETF up 5 percent, with Dow Transportation index up 4 percent
- XRT retail ETF up 10 percent
- XHB homebuilder ETF up 4 percent
- Office REITs Boston Properties & Vornado Realty up 20 percent and 10 percent.
- Homebuilder Toll Brothers up 10 percent
- Ethan Allen up 6 percent
- Goodyear Tire is up 36 percent
- Wyndham Worldwide up 11 percent
- H&R Block up 36 percent
- MasterCard, Visa & American Express up 24 percent, 6 percent, and 15 percent respectively
- Consulting firm Accenture up 24 percent
The most optimistic market action is probably in that XLY consumer ETF. Though its components are largely large-cap companies across a broad consumer spectrum (McDonalds, Disney, Target, Ford, Comcast, etc), the ETF has rather quietly gotten back close to its 2007 highs.
The negative Nellies out there can point to their own stats: oil falling, home prices stagnant, NFIB small business survey still weak, Marriott and the cruise company shares down, etc. And yes, we still have a warehouse full of economic problems.
This isn’t about being an economic Pollyanna, and ultimately there are a host of reasons why people buy stocks. But returns are returns, and agree with it or not, the message of the market appears to be one of more confidence in the consumer, and thus the economy, ahead.