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Nothing to see here, or is there?

| August 04, 2021
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If you wonder why we don’t lend much weight to the day-to-day swings in the markets, notice the circle in the chart below. The S&P 500 was down 69 points, and the Dow Jones Industrial average was down 700 points. Both charts look similar and show that the market has moved back to highs that it had hit prior to that sell off.

My point on this is it would be very easy to get caught up in the emotion of big price declines, only to see the markets rebound when more calm returns.

As I mentioned, I was out last week bicycling across the beautiful state of Iowa. I won’t waste valuable space in this, but for those interested in my thoughts about that adventure, you can click here to read more.

Since I was mostly off the grid, let’s check in on things I missed last week. Below are a couple different examples of consumer confidence and investor enthusiasm. Both measures gauge how good people feel and generally are contrarian indicators. Below is the AAII Investor Sentiment Survey.  You can see that we are a long way from the max bullish reading back in April but lack a significant amount of bearish sentiment to propel the markets significantly higher.

Next is the chart of the difference between Consumer Confidence and Consumer Sentiment. You can see that this spread marked a new high dating back to the late 1970s. Historically speaking, it hasn’t spelled doom for the markets (at least not right away).

While the economy appears to be slowing into a normal growth rate (from the COVID recovery), we are starting to see some extremes. Here is the latest headline regarding household debt.

Meanwhile US debt per capita hits another new high.

Travel spending is back to pre-COVID, though it’s now potentially facing a test with the Delta variant:

 

But offices remain 1/3 of pre-pandemic levels.

Will the following policy help or hinder employees coming back to the office? I guess we’ll find out in the coming months and years.

 

As we head toward the dog days of summer, enjoy the nice weather and hope the western wildfires die down and the market can continue to hold things together. Have a great week, or what’s left of it as we write on this Wednesday.

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