S&P 500 All Time High – July 2016

Today was a big day for the stock market. The S&P 500 hit an all time high at 2137.16. This comes just two weeks after the markets tanked due to the Brexit vote over seas. Although we have had a ton of volatility the past two months, the market just keeps going up.

What is my concern with the S&P 500 at it’s all time high?

Jobs Report

The unemployment rate has been declining almost every month since 2010. This is a lead indicator that shows how productive the country is. If people are going back to work, that means S&P 500 at all time highcompanies need more help to produce and sell more product.

My Concern with the unemployment rate. 

You may have heard economists all but laugh at the unemployment rate in the high 4% range. This is due to the fact that there are thousands, if not millions, of workers that are underemployed. Being underemployed means that you are working at a position you are over-qualified to do. The most common example of being underemployed is the young person with a MBA working in a fast food restaurant for minimum wage. This could be devastating to our economy in the long run for many reasons. One, that person is unable to buy a home, new car, etc. This will in turn, affect millions of people that depend on these industries to put food on their family’s table. Another reason is that the person more than likely has thousands in student debt they are unable to pay back.

I have been known to be someone that sees the negative aspects of the stock market, but you cannot tell me the underemployment rate of 10% + is healthy for our economy.

Country’s Debt.

Although the main stream media does not cover it like they used to, America still has over $19 trillion in debt, with no resolution whatsoever. Although it probably won’t happen, America’s credit rating could be down graded, like 2011, from it’s AA+ rating.

America does not make anything anymore. 

Think about it. Do you go to your job every day and help produce products that will eventually be sold internationally? I’d say 90% of the people reading this is in the service industry, meaning they work in retail, banking, real estate, law, etc. In my opinion, this is the most alarming thing about our economy.

Enjoy the stock market highs. I hope you made a solid return the first half of 2016. We have a lot of news coming in the next few months that will really paint the picture of where the markets, as well as the country, is headed. Not everyone is buying in for the ride up, however. Take a look at the price of gold and silver since the Brexit vote. The major move upwards means a lot of people are seeing bad new a volatility ahead for the markets, so stay tuned.  http://www.cnbc.com/2016/07/11/sp-to-try-to-hold-highs-in-lull-ahead-of-earnings-season.html

 

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