Independent advisors determined to see signs of improvement in recent data. Confidence in the U.S. economy and its stock market among independent investment advisors increased for the fourth month in a row this month, according to AdvisorBenchmarking's Advisor Confidence Index (ACI). The gauge |image1|rose nearly 4% from 100.48 in May to hit 104.02 -- it's best result since October 2007 -- in June.

Though attributed to progress in interest-rate spreads and the real money supply, a stock-price rebound of about 36% since early March, improving consumer sentiment and a surprising spike in new-construction permits -- signs, according to some, that a meaningful and sustained recovery is on the way.

Less bad

"Our most reliable sources for economic forecasting predict that the recession ends this Summer," says Bill Ramsey of Raleigh, N.C.-based Financial Symmetry. "The stock and bond market smell the turnaround."

But others view the ACI's springtime resurgence with skepticism.

"Right now [the dominant sentiment] is 'Things are less bad than we thought,' " says Peter Wheeler of Wheeler-Frost Associates in San Diego. "Somehow that has become good."

Based on a monthly survey of independent investment advisors, the ACI goes from a "very negative" 33.33 to a "very positive" 166.67. Its mid point, 100, represents a neutral outlook on the stock market and the economy. The index achieved an all-time high of 121.41 in December 2005. It hit an all-time low of 79.07 in October 2008.

All four of the components used to calculate the ACI were in positive |image2|territory in June. But the fact that advisors' view on the current state of the economy was so much more favorable than the 12-month view could be indicative of waning confidence.

Meanwhile, the Conference Board's Consumer Confidence Index (CCI), |image3|which is based on a representative sample of 5,000 U.S. households, fell back to 49.3 (1985=100) in June from 54.8 in May. In particular, the CCI's Present Situation Index decreased to 24.8 in June from 29.7 in May, and its Expectations Index declined to 65.5 in June from 71.5 in May.

"The decline in the Present Situation Index, caused by a less favorable assessment of business conditions and employment, continues to imply that economic conditions, while not as weak as earlier this year, are nonetheless weak," says Lynn Franco, director of the Conference Board's Consumer Research Center. " Looking ahead, Expectations continue to suggest less negative conditions in the months ahead, as opposed to strong growth."

AdvisorBenchmarking is a subsidiary of the Rockville, Md.-based asset manager Rydex-SGI. -FWR

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