The invincible index

Dow record high

Or should that be indices

U.S. stocks have shown remarkable resilience in recent years.

All rise

They have all climbed ever higher, breaking new records despite many uncertainties circling the U.S. economy such as, Trump’s impeachment, allegations of election shenanigans, allegations of model payoffs, recessionary fears, inverted yield curves, drone attacks and an Iranian missile attack and even Brexit – the markets just shrug it all off and keep on climbing.

Clearly the Fed’s ultra cheap money has dramatically assisted the rise, especially after the policy pivot of 2019.

U.S. stocks reach new highs

The Nasdaq reached a new high on 8th January 2020 closing at: 9129 as did the S&P 500 – closing at: 3253 with higher levels touched in intra-day trading.

U.S. GDP
U.S. economy

The U.S. economy has moved from the doom and gloom of recessionary fears just a short few months ago to stellar performer. Nothing seems to shake it down.

Recent GDP data was revised up, good job data was reported for the last month again, a good business reporting season delivered upbeat figures and the U.S. has a strong consumer base too. So, what is likely to derail U.S. stocks and pullback the invincible index?

Probably debt

Probably the burden of debt. The U.S. and world economies have so much cheap money sloshing about the system. Both consumer and businesses have been encouraged to borrow far too much again in my opinion. It’s too easy.

If we have a couple quarters of slow and low business returns and if the consumer stops or pulls up on spending, we will then likely see a pullback and possibly even a market correction.

Stocks & Shares

The questions we should be asking are: what do we do with all this debt, is the economy due to slow and are U.S. stocks overvalued?

Debt may likely unravel world economies but central banks with their cheap money policies will get away with it again – they most likely will not have to answer for their mistakes.

U.S. and China have yet to sign the phase one deal and further resolve a mountain of unattended pressing economic issues. And now, we have the escalation of tensions with Iran to deal with. Or has that been fixed?

Oh.. and there’s North Korea too…

And President Trump impeachment outcome with the Senate yet to vote.

And… it’s U.S. election year too!

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