Transcript:
Tom Vaughan:
Hello, everybody, welcome to Thursday. The S&P 500 was down almost a half a percent today. This is the fourth day in a row, the market’s been down a little bit; lots of different reasons. There are a couple reasons that I don’t think are being talked about enough, that I think are important. Number one, is that they’re talking about the reinstatement, or replacement of the current chairman of the Federal Reserve, Chairman Powell. The market seems to like Chairman Powell. Obviously, whoever they might get would be an uncertainty and the market doesn’t like that, in terms of uncertainty. So it’ll work its way out as far as that goes, but that certainly is going to cause some softness, until that is worked out.
The other thing is that here in this country, we have this crazy thing called a “debt ceiling,” which is essentially: We borrow money, partly to pay off old debt, and operate as a whole, and then there’s a ceiling for how much we can borrow. And so, when we run into that ceiling, then we can’t borrow anymore. And so then Congress has to increase that debt ceiling. Well of course, that becomes a big political game of chicken: Lots of threats are going to be made, especially in this environment, in my opinion. And so again, the market’s going to be a little bit nervous about that.
Most of the people watching the show are kind of relying upon my outlook on what’s happened and what might happen here, so I will tell you just flat out, that all of the things that are happening with supply chain shortages, even the Delta Variant, and the fact that we’re having trouble getting people back out to work, and Chairman Powell and this debt ceiling: There’s always all of these things that I could list off that are issues. The market’s still going to do pretty well: You just got to continue to look at those basics. And when you have a low interest rate environment, and you’re looking at the banks, and you can only make a half a percent, and the stock market is doing a lot better than that, and you look at what’s going on with the money coming in from stimulus programs, the possibility of the infrastructure program, and all these different things that have happened as a whole: This is a pretty strong environment for the stock market.
Now, it doesn’t mean you’re not going to have some volatility, it doesn’t mean you won’t even have a 10% or 15% downturn; although we haven’t had any of those. This will be 215 days in a row, this Friday, trading days that we haven’t even had a 5% downturn, and so that’s because this is such a great environment; but it doesn’t mean things don’t slow down. So I do think it’s important to understand what might happen and to have an open ear and an open mind as to what you would do if things do get worse, but right now, I think things are going to be okay, as far as that goes.
And I’ve always felt like these times of softness, are a great time for these kinds of “budget buyers”: “Buying the Dip” people, to come in and start to create that next run. And that’s what I’ve been saying all the way along, and that’s what’s been happening pretty consistently. I don’t know how far that dip comes down, or when they come in as far as that goes. But really, this is still a great environment for the stock market. So let’s see what happens.
I look forward to talking to you tomorrow, you can send in your questions to asktom@talkmoneywithtom.com. Our show is 12:15pm to 1:00pm; it’s been a really good time. I love doing that as a whole. And I’ll do a summary for what I see for the week at the beginning of the show. So look forward to seeing you then. Thank you very much.