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Ignore the Debt Ceiling Noise
Mainstream media remain fixated on ‘debt ceiling’ negotiations – warning of a “financial catastrophe” if this doesn’t get done. This is the 78th time we have hit the so-called debt ceiling. And how many defaults has there been? Zero. A deal will get done. And if we are presented with a sell-off in markets – then it represents an opportunity.
Excess Liquidity Still Present
Many people seem puzzled as to why the market continues to trade higher. For example, some readers have told me they missed the rally – wondering why things have not completely unravelled sooner. They’ve chosen to sit things out for one reason or another. And that makes sense… I’m sure they are not alone. Why are markets defying gravity? And how long could it continue? The short answer for a while yet. And the driver is liquidity.
The One Thing Driving the Market
It’s risk on. That’s the market’s sentiment. Question is whether that risk is worth it? There are only a handful of stocks carrying the market higher – a sure sign of both fragility and bearishness. Are there are only “10” stocks that can grow? We have not seen a market this narrow since the dot.com bust. Now should names like Amazon, Google, Apple, Microsoft, Meta and Tesla pull back from nose-bleed valuations – the whole house comes down with it.
Surface Cracks Appear in Credit
If there’s one thing that keeps the US going… it’s the availability of cheap credit. Love it or hate it – the US is a credit driven economy. If credit dries up – it’s goodnight nurse. The US consumer now owes close to $1Trillion on their credit card – a 17% jump from a year ago and a record high. More than 33% U.S. adults have more credit card debt than emergency savings