7/25-7/29/16 Charts of the Week

Investors that do not know where to look for opportunities and are utilizing a balanced portfolio strategy have had a tough go of it the last 7 years. The Dow and S&P 500 have been stuck in a narrow trading range, interest rates are low, and in some cases (especially in Europe and Asia) bond yields are negative. The markets appear to be stuck in a rut and nobody can figure out why…unless you look at the raw data.

tax blues

For over a year, we have been saying that stocks are overvalued, and the longer that rates remain low and large-cap stock prices remain artificially inflated, the worse the inevitable correction will be. In addition, we have commented on how housing and autos have been the few bright spots in the economy over the last 12 months. Unfortunately, home ownership has fallen to its lowest level in over 50 years…

home ownership

And auto sales are beginning to decline as well…

auto sales

Many will look at declining auto sales and think nothing of it, but take a look at the percentage of retail spending that the automotive industry makes up…

consumer spending

An astounding 20% of all retail spending is focused on the automotive sector. When the economy has been fragile for over a year, a decline in one of the few strong sectors left may have disastrous results.

Friday morning validated that concern, as Q2 GDP was reported at 1.2%, well below 2.6% expectations. Given these developments, and the lack of yield in both the stock and bond markets, we feel that the 7 year Bull Run may be running out of steam.

If you would like to learn more about our economic forecast and our investment services, please feel free to email us through our Contact Us page or call us at 1-800-624-5597 for a complimentary portfolio review.

 

Happy trading!

Ben Treece is a partner with Treece Investment Advisory Corp (www.TreeceInvestments.com) and licensed with FINRA (www.Finra.org) through Treece Financial Services Corp. The above information is the opinion of Ben Treece and should not be construed as investment advice or used without outside verification.
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