We’ve been wondering how long it would take for someone to link the surprising results of the Westminster Kennel Club Dog Show to the stock markets. MainStreet.com—the Parade Magazine of money sites—takes a stab but just comes up with an article about health insurance for dogs. Next!
Fortunately MarketBeat’s David Gaffen has discovered something far more interesting: The Westminster Kennel Club Dog Show Indicator.

Last night, at the 132nd annual dog show, Uno, a 15-inch beagle, took home the blue ribbon, the first time that breed has won the competition.
The beagle belongs to the hound group, which has only mustered three previous winners since the show’s inception. In two of three years, the Dow performed quite well, with one negative performance.
The average return in those years is 7.4%, as the average gained 20.3% in 1983, the last time a hound was victorious (an Afghan hound). In 1964, when the whippet claimed the top prize, the Dow gained 14.6%. Only in 1957, when another Afghan took home the ribbon, was the Dow weak, losing 12.8%.

For some reason, however, we like the Sports Illustrated indicator from yesterday far better.
Release the Hounds! [Market Beat]

The latest consumer confidence numbers are raising fears that the unwashed masses of the what this once American republic—convinced, perhaps, that Heath Ledger’s death portends bad signs for our economic health—might not spend their allegedly economically stimulating government checks quickly enough or in the right ways. They may, it is feared, decide to save for a rainy day or reduce their own leverage for fears that an economic downturn would reduce their earnings. Quite clearly this would undermine the government’s plans.
Here are the facts: lately, American spending has not grown as fast as our spending power. Indeed, the evidence indicates that it is being converted to saving power, which means that the benefits of the stimulus package to the consumer sector of the economy—which, somehow, means the people who take money from the consumer in exchange for stuff—may be delayed. But this is only because our great and bright have not thought this problem through. The solution was under our Christmas trees this winter, and we only need eyes to see it.
We’re talking, of course, about gift cards. Instead of sending redistribution rebate checks to the people, the government should consider sending gift cards with short expiration dates. Ninety days might do the trick. (Money unspent could be applied to, well, most likely a new round of discount cards but it’s better not to reveal that ahead of time.) It would also save precious time that might otherwise be wasted depositing checks in the bank, where they might be tempted to deposit them in a savings account rather than a checking account.
Perhaps we underestimate our government. It could be that this is exactly what government plans to do anyway. Reducing interest rates should have the marginal effect of reducing savings rates, and increasing inflation will be a multiplier on this effect. At this point, the dollar itself should probably be looked at as a gift card that ought to be spent immediately to avoid its expiration date.
New dip in US consumer confidence [BBC]

Oil costs like a billion dollars a barrel now. And, according to a Bloomberg survey, 2/3 of the American public think we’re headed for a recession.
Of course, the “American public” is kind of dumb. As Barry Ritholtz says, they’ve predicted 9 out of the last four recessions. But just because you’re stupid doesn’t mean you’re wrong!

Americans Turn Negative on Economy, Expect Recession, Poll Says [Bloomberg]
2/3rds Americans Say Recession is Likely [The Big Picture]

A couple of times we’ve mentioned that many financial markets have been behaving as if August never happened. Well, in many ways it didn’t. The Fed reversed the August 7th decision on interest rates. The quant funds reversed polarity and returned to warp speed. The huge hedge fund redemptions weren’t. And now that negative jobs number has been taken back. Turns out we gained 89,000 instead of losing 4,000.
Well, you know what else isn’t happening? The October rate cut. The oddsmakers in the sport of Fedlinlogy–the folks who trade Fed fund futures–are now betting against a rate cut at the end of this month.
But don’t worry. The folks who think the Fed always needs to cut rates will find a way to ignore the new jobs numbers. They were government jobs, you see. Teachers and such. And those don’t count. These are also the folks who tell you there’s no inflation. Ever.

Update: In the comments section, a hard working reader thinks we’re reading the rate cut signals wrong! Make up your own mind.

We’ve seen some pretty crazed advertisements in phone booths. One was for a consultant who would help you learn to operate your Apple computer. Since Apple’s interface is about as user-intuitive as it gets—it just works—if you can’t operate it on your own, you probably can’t use the phone to call the consultant either.
Financial Armageddon columnist Michael Panzner, though, came across an even more memorable phone booth ad. Click here for a larger version. And click here for his reaction.
A Bell Rings in the Streets of New York [Financial Armageddon]

The Conference Board, with 90 years of trusted insights into generic nomenclature, released its monthly report today.
The U.S. leading index climbed in July, which suggests that economy is going to grow, but at a snail’s crawl. This is good news because crawling is better than stagnation or retreat, and you need to crawl before you learn to walk, and how many roads must an economy walk down, before you call the economy a bull? We’ll see if the August report stays in tune with suggesting slow economic growth.
The positive contributors to the leading index’s climb were trends in consumer expectations, vendor performance and initial claims for unemployment insurance which offset the negative contributions made by trends in housing permits, manufacturers’ new orders for non-defense capital goods and interest rate spreads.
Global Business Cycle Indicators [The Conference Board]

We’ve said it before and we don’t mind repeating ourselves. Barry Ritholtz takes down financial writers like it’s his job. This time he’s taking on an article from Sunday’s New York Times in which Ed Yardeni tells us to ignore the reported numbers on jobs growth because, well, uhm, because so many economists thought the numbers would be higher. And all those economists can’t be wrong, can they?

The Cognitive Bias of Ed Yardeni [The Big Picture]