Rebounding Consumer Confidence on both sides of the pond
Consumer confidence is rebounding in the U.S. and Europe after a disastrous plunge during the global lockdowns. While the pandemic continues to take its toll, at least people are getting back to work (contributing to the rebound in consumer confidence). Wether a potential 2nd wave of infections in Europe/Asia will dampen consumer confidence is yet to be seen.
The European Commission Consumer Confidence index rebounded sharply from one of the lowest readings on record.
While this may be thought of as a bullish factor for European stocks, that wasn't typically the case. By the time Consumer Confidence had rebounded sharply, most of the gains in European equities had already occurred.
*This is partially because unlike U.S. equities, European equities have spent much of the past 3 decades swinging sideways. Momentum doesn't work that well.
In the U.S., Consumer Confidence is rebounding after a less extreme plunge.
While a rebound in European consumer confidence wasn't necessarily bullish for European equities, a rebound in U.S. confidence was mostly bullish for U.S. equities over the next 6-12 months. This happened:
- After the 1973-1974 bear market and recession ended.
- After the early-1980 bear market and recession ended.
- After the 1990-1991 recession ended.
- In the later stages of the 2007-2009 bear market and recession.