The Market Bull – November 12, 2018
The major averages finish the day with very large losses on little significant news.
The 3rd Quarter Senior Loan Officer Survey came out today with a 15.9% decline in Commercial and Industrial lending standards. Consumer loans mostly loosened as well with the expectation of credit cards that saw lending standards tightened for a 5th consecutive month. Demand increased modestly overall after falling last quarter. Commercial and residential mortgage demand slipped for the quarter. Overall credit growth continues, but it has slowed markedly.
One of the often overlooked and rarely discussed economic trends in the new millennium, especially by the lamestream media is that debt growth exceeds economic growth. As an example last years Federal budget deficit was 1.27 trillion Dollars, or 6.23% of Gross Domestic Product or GDP a figure far higher than actual reported GDP growth. With 3 ever larger debt bubbles blown in the period since 2000 it’s hard to escape the idea that without prodigious quantities of new debt we would have little if any economic growth. An unsustainable path if ever there was one as without ever larger quantities of debt the economy will go into a tailspin. High debt growth also all but guarantees dangerous asset bubbles as well. Given that this short-term virtuous cycle is certain to collapse under its own weight sooner or later. A replay of the 2007-2009 crisis is a question of when, and not if.
Standard and Poors 500 Index closed at: 2,726.22 down 54.79
NASDAQ finished the day: 7,200.87 down 206.03
Gold ended trading at: $1,201.20 down $6.20
This is Caleb Lawrence Registered Investment Adviser Scotts Valley Drive and Willis Road in the Scotts Valley Plaza, Suite 202, Scotts Valley, Ca, 95066. Or call my direct line 831-334-5318
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