Good morning.
It seems investor enthusiasm experienced since the election has come and gone as the S&P dropped this morning to levels not seen since the early part of October.
And the cause of recent glumness? Who knows? There is no shortage of finger-pointing … nor any shortage of fingers … although tariff inconsistencies and adjustments are viewed by most as the main catalyst.
The employment situation is also of related concern as intended cuts … mainly due to federal government layoffs … might drive the unemployment level up over the next few releases … which is especially troubling as it comes at a time that ADP reports a reduction in small business planned hiring for the first time in years.
As alluded to yesterday, it has to be tough being a small business owner right now. As most count on some degree of imports in their manufacturing process … just how do you price in a cost (and maybe even availability) that is so uncertain? And exporters shipping to Canada have another issue entirely.
It seems many Canadians are following a “buy the leaf” program … where not only are Canadian-made goods displayed proudly … but, interestingly, so is anything else that is “non-American” … as an orchestrated boycott is underway. Let’s say things do work themselves out with Canada … and we become “friends again.” There is some thought that the anger presently felt by many of our “neighbors to the north” will take years to get over.
It is often said that there are “no winners in war” … and this trade war in which we find ourselves might have already formed scars that will take a long time to heal.
One of the other concerns going on now could be the plight of the American consumer … for whom rising prices have been challenging enough. Daily Shot reports something of which we were already aware telling us “households increasingly face challenges” … but there are important reports to back this up, including a Fitch Ratings comment where the reported percent of auto loan borrowers that are at least 60 days late are “the highest on record.”
And if people are having trouble paying car loans … at what point do they cut back on their going-out-to-eat habits … or coffee purchases … or subscription services? Or have they started already?
That about wraps it up for now though I did note that Nasdaq is making plans to allow for 24-hour stock trading.
Great … non-stop stock trading is just what I need in this environment …
… for where else can I lose money around the clock?
Have a great day,
Joseph G. Witthohn, CFA
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