Weighing the Week Ahead: Is It Time to Worry about Debt?

The economic calendar is normal with a focus on housing. Some will be parsing the Fed minutes while others watch the impeachment hearings. This week’s topic may not be a media focus for the week ahead, but it gets constant attention. With a government shutdown and the debt ceiling on the agenda, let’s seize the moment and ask:

Is it time to worry about debt?

I suspect that many readers believe it is way past time!

Last Week Recap

In my last installment of WTWA, I took stock of the recent data avalanche and concluded that it was a good time for investors to act. I also noted that this opportunity would not disappear overnight. The key trends are apparent to the watchful, so the opportunity will last. There has been some commentary on my “Great Rotation” themes. I’ll cite some of the examples in WTWA.

The Story in One Chart

I always start my personal review of the week by looking at a great chart. This week I am featuring the version from Investing.com. If you visit the original, you will see many interactive features, including the news events indicated on the chart.

The market gained 0.8% for the week, closing on the highs. The trading range was 1.4%. You can monitor volatility, implied volatility, and historical comparisons in my weekly Indicator Snapshot in the Quant Corner below.

Personal Note

Inspired by my travels, I have made a small change. I know that readers like the basic approach of WTWA. I am trying to do a bit more to emphasize important current investment themes and how to take advantage of what is happening. You might not have noticed the shift, but comments are welcome.

The News

Each week I break down events into good and bad. For our purposes, “good” has two components. The news must be market friendly and better than expectations. I avoid using my personal preferences in evaluating news – and you should, too!

New Deal Democrat’s high frequency indicators are an important part of our regular research. The results remain positive in all time frames. NDD emphasizes that “…other forms of transportation, particularly trucking, have not confirmed the downturn in rail.

The Good

  • NFIB Small Business Optimism improved slightly to 102.4 from September’s 101.8. This is off the post-election highs, but still elevated.

  • Mortgage applications increased 9.6% for the week of 11/9. The prior week was a decline of 0.1%. We need a chart to put this series in perspective. The Daily Shot version illustrates the seasonality as well as the strength of 2019.

  • Retail sales for October increased 0.3%, rebounding from September’s decline of 0.3% and beating expectations of a 0.2% increase. Retail sales ex-auto grew only 0.2% versus expectations of 0.4%, so the overall report was only moderately positive.
  • The White House has no intention for a government shutdown. (The Hill, quoting Mnuchin).
  • Heavy truck sales were up 3% year-over-year in October. (Calculated Risk).
  • Market breadth has been good.