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Optimism is still in very short supply





Both of these measures of consumer confidence (Conference Board on top, Michigan on the bottom) are saying the same thing: confidence has improved from the abysmally low levels of the past recession, but confidence is still very low from an historical perspective. I think the same can be said for the equity market, where flows into domestic equity funds remain decidedly negative.


So I continue to believe that the rally in equity prices is not being driven by optimism. It is being driven by a reduction in pessimism. It's not that the economy is doing great, it's that the economy is not doing as badly as the market has been expecting.

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