September 8, 2016

Stocks gapped down at the open after the European Central Bank (ECB) gave no indication it will extend its quantitative easing program. The Dow and SPX are currently down 33 pts & flat, respectively. Energy stocks are bucking the trend, up over 1% in early trading. WTI crude oil is trading up over $46/barrel after a favorable oil inventory report. Bonds are selling off today. The 5- and 10-year Treasury yields are back up to 1.15% and 1.58%, respectively. 

In an interview today on CNBC, Bank of America CEO Brian Moynihan said he is upbeat about the strength of the US consumer. August was “the strongest consumer spending growth in debit and credit cards year-over-year, this year.” In addition, year-to-date debit/credit spending is up 4.7% over last year and that rate is accelerating. “The consumer is in very good shape.” On the commercial side, middle market companies are making money and credit quality is as high as it has ever been. However, companies are not “being really aggressive” because they’re worried about the election “and all the other things going on.” But loan growth is still positive on the commercial side. 

Separately, Bloomberg’s Consumer Comfort survey rose to 44.0 last week from 43.4 in the prior week. Survey results have generally been in a up-trend since November 2015. Even though sentiment regarding the economy was unchanged at 35.1, other components like buying climate and personal finances improved. To give some perspective, pre-Great Recession survey levels were around 44-48 and trough levels during the recession were around 22. 

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