There is no "euphoria" at this time. In fact, at times this year market sentiment has been overly negative, fear is over the top, too many people failed to fully participate in a nice year to be long equities.
The problem looms in the shadows.
While the market continues to move higher it's having a perverse effect of driving people
away. My Broke Person Indicator (TM) has indicated that when people at starbucks start talking about recessions it's generally bad. While we may not have a recession there are looming threats surrounding the student loan crisis, rising healthcare costs, affordably priced housing, etc.
This year Trump removed borrower protections on payday loans. The payday loan industry operates based principally on creating a revolving debt door where they pass customers between each other by virtue of these people requiring more loans to pay off previous loans.
12 million people a year get trapped on this treadmill with a huge contingent of them being millennials by virtue of simultaneous student loan, rent, and stagnating wages in most industries. Many more of them are fixed income earners who are, without surprise, suffering from many of the same problems millennials are. It has
never been a better time to be a scumbag shithead payday loan company.
Total credit card debt has increased 4.7% y/y and there's no sign of it slowing down. We are staring a crisis in the face and doing nothing about it.
The recession will come as a result of people shoving money under their bed instead of spending it. Stimulus packages and massive tax cuts should be given to working and middle class people and raised north of 80% on the top earners. Unfortunately, that ship has sailed and a stimulus would just result in even more money being saved.
December could be a rout as a result. Taxes are going up next year on the middle class by virtue of the IRS removing basically any write off ability for single filers making more than 100,000 a year. I know in 2020 I'll be focused on squirreling away as much money as I can. While the rich get richer, those of us in the middle class (the heart of the American Dream) are continually punished for trying to improve ourselves (god help you if you are both middle class
and single!) The exact kind of people who propel the economy, middle class people with spending money, are now hiding as much money as they can instead of spending it. Of course, it goes without saying poor people aren't spending either.
It's going to get much worse before it gets better.
