State Street Investor Confidence Index at 18 Month Low

Yesterday State Street said their Investor Confidence Index fell to an 18-month low of 94.3.

• pdf: Investor Confidence Declined in August by 7.4 points to 94.3
  
• “After a few months of caution and measured risk appetite, global institutional investors have started to display risk-averse behavior as they navigate through elevated trade uncertainty and geopolitical turmoil. This sentiment was also seen across global equity markets as defensive sectors outperformed. The decline in confidence was particularly apparent for North American investors, with the North American ICI recording its lowest reading of the year,” commented Kenneth Froot.
  
• A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets.
  
• Graph: State Street Investor Confidence Index vs the S&P500 

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According to State Street,

 "The Investor Confidence Index was developed by Kenneth Froot and Paul O’Connell at State Street Associates, State Street Global Exchange’s research and advisory services business. It measures investor confidence or risk appetite quantitatively by analyzing the actual buying and selling patterns of institutional investors. The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence. A reading of 100 is neutral; it is the level at which investors are neither increasing nor decreasing their long-term allocations to risky assets. The index differs from survey-based measures in that it is based on the actual trades, as opposed to opinions, of institutional investors."

New Record Highs After Fed Chairman Powell says The US Economy is Strong!

Today, three of the four major US stock market indexes I follow closed at new record highs.

In Jackson Hole, Wyoming this morning Fed chairman Jerome Powell said the strong US economy justifies raising interest rates, but in a gradual fashion.  Most take this to mean the Fed will raise rates in September and perhaps once more before the year ends. 

From "Monetary Policy in a Changing Economy"  Transcript

“As the most recent FOMC statement indicates, if the strong growth in income and jobs continues, further gradual increases in the target range for the federal funds rate will likely be appropriate. 

The economy is strong. Inflation is near our 2 percent objective, and most people who want a job are finding one. My colleagues and I are carefully monitoring incoming data, and we are setting policy to do what monetary policy can do to support continued growth, a strong labor market, and inflation near 2 percent.”

This expected 0.25% rate increase in September would bring the Fed Funds rate to a range of 2.00% to 2.25% from its current range of 1.75% to 2.00%.

I discussed this in my latest newsletter and Timer Digest wrote about it this weekend:

my commentary

Here are charts of the four major US stock market indexes I track showing that in fact the markets were happy with the Fed raising rates.

To get my "Special Email Alerts" and the "Auto Buy Sell Table" where I list ahead of time what stocks I will buy at what prices during declines and what I will sell during the advances. These buys and sells are at preset target prices you can use to set limit orders at your broker.

Kirk Lindstrom's Investment Letter

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the August 2018 Issue for FREE!!!

More about Timer Digest: "Timer Digest monitors over 100 of the leading market timing models, ranking the top stock, bond, and gold timing according to the performance of their recommendations over various periods of time. Timer Digest profiles many of the Top Investment and Financial Newsletter writers, including discussions of their timing models."

Treasury Bond Rates vs the Fed Funds rate

AAII Irrational Exuberance & Pessimism Sentiment Graph

AAII Bulls Minus Bears vs DJIA and "Irrational Exuberance & Pessimism" Investor Sentiment Graph for 8/22/18:

The AAII Investor Sentiment Survey measures the percentage of individual investors who are bullish, bearish, and neutral on the stock market for the next six months. AAII is the "American Association of Individual Investors." For the survey, Individual members of the AAII are polled on a weekly basis. Only one vote per member is accepted in each weekly voting period. The AAII reports the weekly results at https://www.aaii.com/sentimentsurvey/.

As of 8/22/18, the AAII members are:

• Bullish: 38.46%
• Neutral: 34.47%
• Bearish: 27.07%

AAII Bulls vs Bears Investor Sentiment "Irrational Exuberance & Pessimism" Graph

Timer Digest Update:

More about Timer Digest: "Timer Digest monitors over 100 of the leading market timing models, ranking the top stock, bond, and gold timing according to the performance of their recommendations over various periods of time. Timer Digest profiles many of the Top Investment and Financial Newsletter writers, including discussions of their timing models."

To get my "Special Email Alerts" and the "Auto Buy Sell Table" where I list ahead of time what stocks I will buy at what prices during declines and what I will sell during the advances. These buys and sells are at preset target prices you can use to set limit orders at your broker.

Kirk Lindstrom's Investment Letter

 Subscribe NOW  and get
the August 2018 Issue for FREE!!!

Charts of the AAII (American Association of Individual Investors) Bulls minus Bears Index versus the market are key sentiment indicators for stock market technical analysis.  Contrarian theory states the time to buy is when fear and pessimism are at a maximum since this usually occurs near market bottoms.

More Information

• A contrarian is a person with a preference for taking a position opposed to that of the majority view prevalent in the group of which they are a part
  
• More about Technical Analysis & Sentiment Indicators
  
• Discuss on Facebook at Investing for the Long Term.

Bitcoin Scam - First and Final Notice Scam & Extortion Letter

A neighbor (Marius Milner, Barron Park) posted this in our local "nextdoor.com" social media group.

Bitcoin extortion scam doing the rounds 

I got a letter in the mail, in a plain white window envelope with no return address and no legible postmark. I've attached photos with my address and most of the scammer's Bitcoin address edited out.

A quick search for the contents suggest that this has been going on for a few months. The letter is sufficiently well worded that I think some people might be easily taken in by it. Don't be fooled, and stay safe!

If you get one of these letters, report it to the police department and the US Postal Service.

Update

Marius Milner - Barron Park·23m ago

I've reported this letter to the US Postal Inspection Service, since it's mail fraud. I looked up the Bitcoin address they told me to send money to, and unsurprisingly it has zero balance and no transaction history, making it effectively untraceable.