How Much Confidence Do We Have in Investor Confidence Indexes?

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SYNOPSIS

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These really are sad times. In Canada a major GM plant closure. Among various reasons, GM chose to shut down Oshawa, because Trump’s tariffs were driving up prices of Canadian steel. (They don’t want to use crappy US steel, and US steel makers couldn’t keep up with demand anyway.) GM no doubt has other issues too, because they’re closing plants in Mexico and the US too. That can’t all be steel tariff related (or is it?). So, Trump fights back by attempting to cut all subsidies to GM for, well, everything. Meanwhile the GM Canada union should be called on the carpet too. Plant closures do happen. Maybe not that often, but did they have a contingency fund for workers in case that happened? No. Do they have a contingency fund for supporting laid off workers while they get retrained? No. Would they pay for retraining? No. One has to wonder what autoworkers got for those millions (or billions?) of union dues? Millionaire union leaders?

Day by Day… To some extent, this past week was almost a mirror image of the previous week’s. Last time S&P/TSX Composite Index declined -1% and the S&P 500 took a much larger -4% decline. This past week the S&P 500 managed the biggest gains of almost 5%, while the S&P/TSX Composite Index declined.

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PTP… Our PTP APAR score continued to improve over the past week, although we remind you that we have very few holdings. That could change abruptly! Meanwhile the S&P/TSX Composite Index remains negative, but the S&P 500 APAR managed to move to the upside.
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There was no trading in the PTP last week.

Investor Confidence… The November 2018 results for the State Street Investor Confidence Index (SSICI) arrived last week. The Global Investor Confidence Index decreased to 82.7, down 1.7 points from October’s revised reading of 84.4.

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As usual we provide more detail on the regional ICI’s in the complete Investor Confidence section of TrendWatch Weekly.

Cannabis Corner… It was another bad week for pot stocks in general, but a few companies had respectable gains.

PTA Perspective… How Much Confidence Do We Have in Investor Confidence Indexes?
Most investor confidence indexes are based on polls that ask simple questions like “How confident are you that this is a good time to be invested in stocks (on a 1 to 10 scale, where 10 is ‘most confident’?” We prefer the State Street Investor Confidence Index (SSICI), because it provides data on what large investors are actually doing with their money on (risky) stocks vs (safe) bonds. Real money flows are measured, not opinions. This week we describe in broad terms, a project that we have underway to determine whether the SSICI, in spite of its face validity, has any predictive merit.