I imagine that investors’ dreams vary to a large degree. There are some who dream of a market collapse. There are others who dream of new highs. Both dreams can wind up too much for investors as those dreams may be lofty.
Winsor McCay 1905
Furthermore, a long-range plan is one thing. A trading bias based on hope and desire is another.
Even more challenging to all our psyches, whether it be in a sleep state of fully awake, are the misleading headlines that keep emerging over the last couple of days.
China coming to the table, says Trump. China not coming to the table, says White House officials. It’s enough to keep investors’ afraid of falling asleep.
Dreams and hopes aside, what facts are the market’s main influencers?
First, the U.S. Dollar ended lower for the week. Last Friday’s closing price was 25.79 (UUP). This week’s closing price is 25.71. We have been concerned about a weakening dollar because of rumors that it could lose its status as the world’s currency and it could ignite more inflation.
Secondly, the Federal Reserve continues to declare its intention of raising rates. The most dovish statement they have said is that if growth slows, they will pause on that plan. Of all the years I have studied monetary policy, I am most impressed with Powell’s steady hand. He seems to have a handle on what is at stake if he sounds too dovish. The amount of our debt that foreign countries are buying has been reduced big time. This is a major concern.
Third, household debt increased for the 17th consecutive quarter, or more than 20% of where is was in 2013. One in four Americans have student loan debt. The total amount of student loan debt as of August is $1.5 trillion.
“Outstanding auto loan debt is at a record high, north of $1.2 trillion. Loans with terms that last 84, even 96 months, are becoming more common, putting car buyers more at risk of default. A record 6.3 million people are more than 90 days behind on their payment.” Jalopnik.com
