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Consumer Confidence At 17 Year High


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Jerry Welch, Commodity Insite!
Call me at 406 -682 -5010
Ennis, Montana 59729

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Here are a few thoughts from my weekly newspaper column dated November 17, entitled, "When Collective Psychology Changes."


"Consumer sentiment or psychology can also play an important role with the ag-markets that have been in trouble for years. Grain prices for instance, peaked in July and have declined ever since. And this week, the USDA released a bearish report showing stocks of all major grains were modestly raised. With a new growing season only 4 months away, the situation with grains, in the absence of weather related problems is likely to be more bearish than bullish in 2018.


The outlook for the livestock market is not much better. Over the past two weeks, cattle, feeder cattle and hog prices rose to multi-month highs but the rally was short lived. Livestock prices now appear to have peaked out for the foreseeable future. And unfortunately, history shows that cheap feed will, sooner than later, lead to cheap livestock prices. More simply put. Cheap grain prices makes for cheap livestock prices.


The recent and unexpected decline in consumer sentiment is not to be ignored. The bulls, it seems are losing their confidence to some extent. Such a scenario is not a good sign because as the Chief said to me years ago, the greatest loss is the loss of self confidence.


When consumer sentiment begins to show cracks, perceptions change and the collective psychology can quickly morph from a bull to a bear. Or, vice versa. Psychology rules the marketplace above all else. All else!

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And this morning from MarketWatch comes the following article;

"The numbers: Consumer confidence surged yet again in November, with the index jumping to 129.5 from 125.9 in October, the Conference Board said Tuesday. Thats the highest reading since November 2000 and easily exceeded the 124.8 forecast of economists polled by MarketWatch had forecast a reading of 124.8.

What happened: Americans say jobs are easier to find and the number who said business conditions are bad declined.

Consumers were even more optimistic about the next six months. An index of future expectations rose to 1113.3 from 109, besting a smaller increase in a gauge of current conditions. The present situation index edged up to 153.9 from 152."

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This morning in early dealings and in light of the fact that consumer confidence hit a 17 year high, the best performing markets anywhere are paper assets, stocks, bonds and the dollar. Commodities per se are mixed with grains in the red along with cattle. Thus, consumer confidence may be at a 17 year high but such attitudes and psychology are supporting some markets but not others.

The time is 9:54 a.m. Chicago


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About the author


Jerry Welch has been in the futures industry since the late 1970's and is a true veteran of the markets. He has been quoted often in Wall Street Journal and is author of Commodity Insite, one of the longest commodity futures newspaper columns in history. His weekly column has been published each week since the mid 1980's and is one of the most recognized names in the world of commodities.

Mr. Welch is also known widely as a, "so so" flyfisherman.  

His column is published by the Illinois Agri News in La Salle, Illinois, Cattle Today, in Fayette, Alabama as well as Consensus, in Kansas City, Kansas.

He can be contacted at 406.682.5010 for a view of his, "twice a day" market column that includes price forecasts and trading suggestions.

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