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Averages Struggle
The Market Bull 2018

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The Market Bull – December 10, 2018.

After taking out some key technical support levels last week. The major averages struggled in volatile early trade Monday. Entering the final hour with small gains on little real news today.

Consumer Credit came out late Friday handily beating expectations with an impressive 25.4 billion Dollar increase after credit card use surged. Non-revolving debt essentially student and auto loans advanced 16.2 billion.

Revolving or credit card debt jumped 9.2 billion, the largest increase since November of 2017. While higher interest rates have slowed the growth in credit somewhat this year. The Senior Loan Officer Opinion Survey shows that looser lending standards for consumer credit has offset at least some of that effect to keep the debt funded party going for now.

A lot of ink has been spilled over the growing funding gap with respect to public sector pensions in the last several years. It’s not uncommon to find plans underfunded by 30% and sometimes more. Meaning that for every Dollar in promised benefits they only have 70 cents. A recent study by Wirepoints looked at pension benefit guarantees and noted that benefit increases were growing faster that Gross Domestic Product or GDP at the state level. The study looked at the period 2003 through 2016 and noted that while pension promises, and GDP growth were about even in 2003.

Growth in promises started to outstrip GDP growth around 2005 in earnest, and by 2013 promises were far ahead of economic growth. According to the study, accrued liabilities—how much states are on the hook for—between 2003 and 2016 grew more than 50% faster than the economies in 28 states and more than twice as fast as GDP in 12 states. Leading the list are the usual suspects of New Jersey (4.3 times faster than GDP), Illinois (3.23) and Connecticut (3.18), as well as New Hampshire (3.46) and Kentucky (3.08). Once again politicians demonstrate that they can’t do basic math. The whole thing can be read HERE.

Standard and Poors 500 Index closed at: 2,637.72 up 4.64
NASDAQ finished at: 7,020.52 up 51.27
Gold ended trading at: $1,249.70 up 2.90

This is Caleb Lawrence Registered Investment Adviser I can be reached directly 831-334-5318 or stop by my office 5321 Scotts Valley Drive in the Scotts Valley Plaza, Suite 202, Scotts Valley, Ca, 95066.

Additional writings, and other entries are also available on my Blog at www.clinvestments.com

Advisory services offered through Caleb Lawrence Registered Investment Adviser Inc.


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