Registered Investment Adviser Caleb Lawrence
Despite little news a volatile early session sends the major averages into the final hour about even. Yesterday’s Consumer Credit report saw a big jump in credit use during May with the 18.4 billion Dollar gain far ahead of expectations and the highest figure reported in the last 6-months. Led by a huge advance in revolving or credit card debt that jumped 7.4 billion for the month. Non-Revolving debt essentially student and auto loans fell .8 to 11 billion even.
Wholesale trade advanced .4% in May, slightly ahead of expectations on gains in Durable Goods Inventories as other sectors were flat or down. Sales have now fallen for a 3rd consecutive month.
One of the oft sited rationales for buying the dips is that cash on the sidelines is always waiting for an opportunity to be deployed. Given that someone’s purchase is another’s sale it’s hard to figure the “cash on the sidelines” argument. Additionally due to leverage or margin, currently at near record levels investors usually hold negative free cash balances and if one takes the time to look at the Standard and Poors 500 data going back to 1980 positive cash balances are only seen in the periods following the Dot-Com crash and Great Financial Crisis, and only briefly at that.