The almost unchanged confidence level in the University of Michigan data points to complacency – a typical sentiment in deflation driven market collapse
Peter Oberois
Mar. 2, 2007

In 1929 the market sentiment as well as consumer confidence was high even after initial crash. The margin calls scared the brokers but the main street was still on the ‘high’. Similarly, the almost unchanged confidence level in the University of Michigan data points to the level of complacency not witnessed for more than seventy years.

The real estate problems, mortgage defaults, higher gas prices, stealth rise in taxes, increasing home heating bills are all being absorbed by a sentiment that believes in a recovery and further prosperity. But according to some think tanks, that is the first sign of economic and stock market collapse.

Complacency is always followed by a serious stock market decline. It happened again. People are complacent and the consumer confidence levels are very high compared to the fundamentals in the economy.

It shows the deflation is affecting the stock market. The gold and industrial metals are bound to fall also. Gold, however, enjoys the geopolitical gyration from time to time.

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