Global macro overview for 18/09/2017:
The University of Michigan Consumer Confidence Index declines slightly. According to the US goverment agency, the preliminary September University of Michigan Consumer Confidence Index reading declined to 95.1 from the previous reading of 96.8 and was below consensus expectations of 95.3. The annual increase was not affected and it is still at the level of 4.5%. The Current Economic Conditions sub-index strengthened from 110.9 to 113.9. This represented a 9.3% increase over the year and the strongest reading since November 2000. On the other hand, in contrast, the Consumer Expectations sub-index reversed August's gain with a decline to 83.4 from 87.7 previously.
The reason behind the decline in confidence might be directly linked to the damage caused by hurricanes Harvey and Irma. The responses from the readers who were not affected by the hurricanes were more robust than from people who suffered property and other assets damage caused by hurricanes. Moreover, survey Director Richard Curtin said: "many people in Houston and Florida couldn't be interviewed, meaning the report may be slightly biased toward the positive". Only 9.0% of respondents reported the storms would hurt the US economy, though Curtin said the disasters may have been on the minds of much more people than that.
The hurricane Irma and Harvey have caused more than $100 billion in damage and sparked a jump in claims for unemployment benefits. As the hurricanes temporarily shuttered refineries in Texas, plenty of respondents expect an increase in the price of the gasoline, which will eventually impact the inflation. Nevertheless, the vast majority of analysts don't expect the disasters to have a long-term effect on the US economy, as reconstruction later in the year should offset their negative impact on third-quarter growth.
Let's now take a look at the SPY (SP500 ETF) technical picture on the H1 time frame. The market gapped up to the new all-time highs at the level of 250.31, but opened with a gap down after the weekend. Currently, the bulls are trying to fill the gap between the levels of 248.66 - 249.91, but the market conditions do not show increasing upward momentum. Any breakout below the level of 248.88 will likely extend the slide towards the other unfilled gap zone between the levels of 246.59 - 247.98.
