Here is a breakdown of the sectors producing our $192B trade deficit. As a country, we are purchasing more than we are producing. I honestly don’t understand all of the implications to our country, but I do understand what happens to a family when you spend more than you make, and the repercussions are disastrous.
Looking at the financial markets, the large majority of investors are of the opinion that the stock market will continue to go up, while a slim minority believe that they are overbought and ready for a decline. Fundamentally, if most investors have their money already in a particular market, that doesn’t leave much capital available to drive prices higher; consequently, prices will stagnate. That’s what’s happened with the stock market rally and all the excitement over the DOW reaching 20,000. There is no more momentum to drive prices higher because is no more money shifting into stocks. Should enough people get nervous and look to protect their stock-heavy portfolio, the market will correct and a lot of money will come out of stocks and into bonds, lowering the collective price of stocks and driving interest rates back down as bonds are scooped up for their perceived safety. I’m not saying that it’s going to happen, but there appears to be a possibility. And possibilities are what dreams are made of–in my case, that’s low rates. Plus, I want to buy me one of those foreign-made cars. 🙂