Consumer Confidence for October came in below expectations at 96.1. This is down -4.8% from the prior month and down -23.4% year over year. Not surprising, given the current employment picture, rising COVID cases, and election uncertainty. It will be interesting to see November's numbers given the progress on treatments and the elimination of election uncertainty. I suspect, much like small business optimism, there will be a pickup in confidence in future reports.

Overall, consumer numbers have surprised me with their resilience. I, along with many others, was expecting more of a slowdown given the runoff of employment assistance and general employment backdrop under COVID.

We had a slew of retail earnings last week, and for the most part, they were solid. Some comments that stood out:

“The consumer economy has, I think, outperformed everyone’s expectations…The economy, I think, is resilient. The economy was relatively strong going in. And I think we’re – hopefully, we get back to where we were soon.” – CSX (CSX) CEO James Foote

“Walmart U.S. had another strong quarter. Comp sales increased 6.4%…Consistent with the second quarter, we saw customers consolidate shopping trips with larger baskets and fewer transactions.” – Walmart (WMT) CEO Doug McMillon

“Third quarter comparable sales increased 20.7%, reflecting a 4.5% traffic growth, combined with an increase in average ticket of more than 15%. Since the pandemic began in March, we’ve experienced a meaningful acceleration in basket growth, both in stores and online as guests have consolidated their shopping into much larger trips. Across channels, our store comps grew nearly 10%, while our digital comp sales grew 155%, contributing nearly 11 percentage points to the Company comp.” – Target (TGT) CEO Brian Cornell

“our third-quarter digital sales grew more than $2 billion compared with last year. For perspective, $2 billion is more than our company’s total digital sales for the entire year in 2014. Somehow, I think I should pause for a second and let that sink in” – Target Corporation (TGT) CEO Brian Cornell

Remember the market is always forward-looking. So this could change. But an encouraging sign nonetheless.

The market seemed to get an extra boost of optimism when it was announced Biden was selecting Janet Yellen for the Treasury. The thinking is that she’ll be dovish on the fiscal spending side. Perhaps this is correct in the near term as we fight COVID, but I wouldn’t count on her being super dovish throughout her term.

In January, here is what Yellen told an audience in regards to the deficit:

“[T]he primary federal deficit in the United States is currently quite large. It’s around 2.6% of GDP, which is well above the level consistent with stability at anything near the current debt to GDP ratio, and it’s projected to rise much further as the population ages and entitlement spending rises relative to GDP. Absent changes in taxes or spending commitments, the U.S. debt to GDP ratio will rise very substantially in the decades ahead. I believe that needs to change to place the trajectory of the federal debt on a sustainable path over the long run.”

Now, this could be another in a long list of public officials that decry high deficits while out of office, only to implement high spending when they take office. The current massive fiscal stimulus is only pulling forward future growth and would likely be a drag on future growth. Once COVID is behind us, I would hope that she follows through on her pledge to reign in deficit spending and not fall prey to those that think you can just keep spending until inflation becomes a concern.

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This is actually a good segway to my next topic, Gold. The above chart shows the prior declines over the last 3 years. In 2018, there was a decline of 14.77% and in early 2020 there was a similar-sized decline of 14.87%.

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Now as uncertainty begins to fade, some of the speculative money is coming out of Gold and the Volatility Index (VIX). The $1850 level failed and is now pushing towards the $1778 level I was watching. This will about match the size of the prior two declines hit the 200-day moving average, and there are numerous prior highs in that vicinity. The confluence of support may (or may not) induce buyers back in. But I will be one of them.

This is not a market call. Gold only represents a small position for me. I’ve never been a huge fan of Gold, but as long as we have negative real interest rates, Gold will remain a part of my portfolio.

Lastly, as I write this the Dow is set to open near the 30K level. More than 7 years ago I wrote a blog post showing a projected upside target of Dow 150K over the very long term. I was incredibly fortunate to have Josh Brown of CNBC actually reach out and feature the post on his own site. Clearly, we are a long way from that milestone, but the Dow has more than doubled since I wrote it. The post was never meant to be a prediction, but rather to make people think about what could be. In the post-2008 world, everyone dwells on the negative and expects the worst all the time. I wanted to do something to shake that up a bit. Not sure I accomplished this, but I gave it my best shot.