In spite of trade tensions ramping up income securities are steady as interest rates are steady with stock prices falling off a bit. Thus far the tariffs announced are mostly just announced with just a small portion actually in effect, but we really need to see some progress in negotiating with China and the European Union.
We still believe that it is possible in the next month that we will get a sizable stock selloff because of the trade tensions–nervous nellies selling as more tariffs occur. Massive selling has already occurred in the ag markets, which we watch closely since we live in the midwest–there will be liquidations of farmland occurring at a faster and faster clip if prices don’t turn around by fall. We already are seeing some liquidations, but they are at prices that are fairly high for this type of a sale–investors remain in the hunt for land at a reasonable price and they are keeping values at levels which are lower, but only by a few percent.
The economy has now ramped up further as we see consumers stepping up to take down huge amounts of debt–this happens when consumers are overly confident of the future for their own financial situation.
Consumer debt which was announced this week jumped by $24 billion in May against a consensus guesstimate of $12 billion. A larger than normal portion of this was credit card debt. While we are not going to worry about these types of things now you can be certain items like these are setting us up for a deep recession down the road (who know when?).