INSTANT VIEW: U.S. consumer mood at record low in February

NEW YORK (Reuters) - U.S. consumer confidence plunged to another record low in February with expectations that already dire economic conditions will continue to weaken and the jobs market will further deteriorate.

U.S. Federal Reserve Chairman Ben Bernanke warned on Tuesday that unless government efforts succeed in restoring financial stability, the nation's recession may not end this year.

KEY POINTS:

CONFIDENCE * The Conference Board, an industry group, said on Tuesday that its sentiment index fell to 25.0 from a downwardly revised 37.4 in January. The median forecast of economists polled by Reuters was for a reading of 35.5. * The February reading was a new all time low for the index, which began in 1967.

BERNANKE * Bernanke told lawmakers that the sharply shrinking economy was at further risk from mutually reinforcing weakening growth and financial market strain. * "To break the adverse feedback loop, it is essential that we continue to complement fiscal stimulus with strong government action to stabilize financial institutions and financial markets," he said in testimony prepared for delivery to the Senate Banking Committee.

COMMENTS:

ERIC KUBY, CHIEF INVESTMENT OFFICER, NORTH STAR INVESTMENT MANAGEMENT CORP, CHICAGO:

"There certainly was a reaction to the collapse in the consumer confidence.

"It does seem that any economic news -- because it seems to be generally uniformly extraordinarily negative -- you do get an instantaneous negative reaction.

"But most market participants know that the backward-looking economic news is going to be poor, so I think you quickly move beyond that reaction and people keep looking forward to some clarity as to what's coming down the pipeline from Washington."

ZACH PANDL, ECONOMIST, NOMURA SECURITIES INTERNATIONAL, NEW YORK:

"(Bernanke) is making some pessimistic comments, expecting only a conditional recovery in the economy assuming that the financial system and banking system can begin to heal. Without that, he doesn't see a sustained recovery in the economy."

"Bernanke has been omitting (talk of buying longer-term Treasuries) in his recent comments, so it is a little bit unclear where he stands on that. I think the Fed's position is that, now that they have discussed it in public, they have the option of proceeding with that program, but as they stated in the minutes they believe the MBS purchase program and the TALF are better strategies at this time. So it is consistent with his other recent public statements."

"A record low in confidence. All of the high frequency survey-based data has been sagging recently -- the manufacturing surveys and the other confidence reports -- which suggests unfortunately that we still haven't found the bottom for the economy."

BRIAN DOLAN, CHIEF CURRENCY STRATEGIST, FOREX.COM, BEDMINSTER, NEW JERSEY:

"Bernanke offers the most dovish commentary on the U.S. economy to date, saying flat out that he does not expect a full recovery for another two to three years -- and any 2010 recovery would be contingent on a market rebound and stabilization in the banking sector. The price action on FX continues to play out in a counter-intuitive way where weak U.S. data and commentary continues to be bullish for the dollar. The market has come to the realization that the old adage of 'when the U.S. sneezes the rest of the world catches a cold,' still holds true. The implication of a weaker economy in the States has bigger and deeper implications across the globe. For now, the dollar remains the ultimate destination for risk aversion".

ROB STEIN, MANAGING PARTNER, ASTOR ASSET MANAGEMENT, CHICAGO:

"I don't put much credence into the number. It's a market moving number, but it hasn't shown any predictability for what comes later. It's more a reflection on employment. Obviously it's higher when trends are stronger.

"We're getting to the point where confidence in general, and employment in general, are both so bad they're good. They're the last hurrah. We're seeing signs that bad news is getting to extreme levels where there is nowhere to go but up."

MATT ESTEVE, FOREIGN-EXCHANGE TRADER, TEMPUS CONSULTING, WASHINGTON:

"We just got the worst consumer confidence number ever on record. Following yesterday's awful sell-off in the stock market, it just highlights the risk that there is right now. Investors remain risk averse and that's going to benefit the dollar obviously."

Bernanke "is saying things that we've heard him say before. He's obviously making the case that the U.S. government and the Fed are going to continue to use all tools possible to revive the economy. I think he's becoming a bit more realistic. Obviously there's no quick fix to this economic downturn and if we see any type of stabilization by the end of 2009, I think that's progress."

CARY LEAHEY, ECONOMIST, DECISION ECONOMICS, NEW YORK:

"Bernanke's comments have taken a back seat to a horrible consumer confidence figure which is grabbing the market's attention. Bernanke's assertion that we won't get a full recovery for two to three years is pretty downbeat. What the market wants to learn from Bernanke he may not even know, and if he does know, may not be able to tell them which is what's the state of the bank rescue plan."

KEVIN FLANAGAN, FIXED INCOME STRATEGIST FOR GLOBAL WEALTH MANAGEMENT, MORGAN STANLEY, PURCHASE, NEW YORK:

"(Bernanke) obviously is well aware that Treasury market participants are waiting or watching to see if the Fed chairman

would make such a mention (of possible purchases of longer maturity Treasuries). This is the third significant appearance by the Fed chairman when it's absent. In my opinion that is not a coincidence."

"The Fed has decided put the Treasuries option on the back burner. They want to get TALF up and running."

"Bernanke certainly paints a more dire picture than the market was initially anticipating which is why I think Treasuries have rallied. He is talking about a non-recovery in 2010 if markets and banks don't stabilize."

DUSTIN REID, DIRECTOR FX STRATEGY, RBS GREENWICH CAPITAL MARKETS, CHICAGO:

"Bernanke's comments were slightly more pessimistic on the U.S. economic outlook. The fact that he is saying it may take two or three years for a full recovery... that's longer than some had anticipated and it's longer than what the government has been saying. One can't also ignore the impact the record drop in consumer confidence is having on markets. We are seeing stocks came off, Treasuries get a bid and the a safe haven bid is giving some support to the dollar."

MARKET REACTION: STOCKS: U.S. equity indexes pare gains. BONDS: U.S. Treasury debt prices extend gains. DOLLAR: U.S. dollar trims losses versus euro.