Apple’s Results May Put An End To Powell’s Dismal Press Conference, Market Reaction Record

Although the Nasdaq (NDX ) continued to suffer through Tuesday’s trading session, the Dow Jones Industrial Average (DJIA) and S&P 500 (SPX) traded in a narrow range. Most of the malaise on Wall Street was due mainly to the highly anticipated results from Apple Inc. (AAPL) that was to be released after the closing bell. We’ll get to the results in a bit, but for now, let’s take a look at something a bit concerning in the way of economic data.

The consumer confidence index fell to 120.2 in this month from 126.6 in December, the privately run Conference Board said Tuesday. Economists had forecast a reading in the 124.0 rang. This was a significant miss and one largely pointing fingers at the government shutdown.

Within the survey’s index that tracks how Americans feel about the economy right now the current conditions barely fell, slipping to 169.6 from 169.9. The still-high reading indicates consumers think the economy is doing fine. But that isn’t the case when consumers look out to the future. An index that looks six months ahead tumbled to 87.3 from 97.7, a sign that Americans are somewhat more pessimistic about the near future.

“With the shutdown now over and equity prices recovering, there is a good chance that confidence will rebound in February,” said senior U.S. economist Andrew Hunter of Capital Economics.”

 “Shock events such as government shutdowns tend to have sharp, but temporary, impacts on consumer confidence,” said Lynn Franco, director of economic indicators at the Conference Board. “Thus, it appears that this month’s decline is more the result of a temporary shock than a precursor to a significant slowdown in the coming months.”

What’s most concerning about the latest consumer sentiment survey is the gap between the Present Situation Index and Future Expectation Index. Historically, when the gap between the Present Situation and Future Expectations indexes has exceeded 50, it is currently at 82.3, “recessions weren’t far behind,” wrote Bespoke’s Paul Hickey.

Of course, that gap between the two indexes was highlighted in a tweet from Double Line Capital’s, bond king Jeffrey Gundlach who offered the following tweet.

 The government shutdown has ripple affects most obviously as demonstrated in not just the consumer sentiment survey, but also as demonstrated to some degree in the latest CNBC Fed Survey. Having said that, the Survey mainly focuses on sentiment surrounding Fed policies and how they impact economic conditions.

According to the Fed Survey, the chance of recession in the next 12 months spiked to its highest level in 3 years, as market participants ratcheted up their worries about global economic weakness, Fed rate hikes, the market sell-off, trade tensions, and the government shutdown. There’s that pesky government shutdown showing up again in another survey. Sadly, the possibility of yet another shutdown looms large in Washington as President Trump presses toward border wall funding.

The CNBC Fed Survey saw the probability of a recession in the next 12 months rise to 26%, the third straight increase. The probability was last higher at nearly 29% in January 2016, following another market sell-off.

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