The U.S. trade deficit rose to a seven-month high in September as
imports surged to a record high amid strong domestic demand, offsetting a
rebound in exports.
The Commerce Department said on Friday the
trade gap increased 1.3 percent to $54.0 billion, widening for a fourth
straight month. Data for August was revised to show the trade deficit
rising to $53.3 billion instead of the previously reported $53.2
billion.
Could the US Economy collapse?
But here's the bigger question that retail investors and Wall Street
are currently asking: Is the current stock market correction over? Given
the many headwinds facing stocks and the U.S. and/or global economy,
the answer may not be what investors want to hear.
Here are 25 reasons and/or scenarios
that could cause the stock market to head substantially lower than where
it's currently valued.
1. The ongoing trade war with China escalates, raising material costs, curbing consumer spending, and hurting corporate profits.
2. Corporate share buybacks fail to boost per-share profits as much as expected.
3. Democrats win one or both houses of Congress, hurting the chance of Republicans to pass further fiscal stimulus legislation.
4. The federal budget deficit continues to soar,
placing added emphasis on our growing national debt, currently at more
than $21 trillion.
5. The U.S. dollar keeps strengthening, placing pressure on exports and worsening the U.S. trade deficit with foreign countries.
6. FANG stocks – that's
Facebook,
Amazon.com,
Netflix, and Google (now
Alphabet) -- continue to draw the ire of short-sellers.
7. The Federal Reserve gets overly aggressive with interest rate hikes, sapping lending demand.
8. The
yield curve flattens, reducing the desire of banks to lend money.
9. Interest rates rise, providing incentive for investors to ditch volatile equities for the safety of bonds and bank CDs.
10. Britain falls into a "hard Brexit." With few or
no trade deals in place, the U.K. falls into recession, taking the U.S.
and other developed countries with it.
11. China's economy experiences its slowest growth
in decades, placing pressure on its ability to import from the U.S. and
other key players.
12. The U.S. housing market shows signs of
weakening, with important markets like California seeing a steep
drop-off in new home sales.
13. Credit-card delinquencies
begin to trickle higher, demonstrating the inability of consumers to meet their payment obligations.
14. The
subprime auto loan market bubble bursts.
15. The U.S. goes to war, regardless of the reason or the country in question.
16. An errant tweet from President Trump stirs Wall Street and investors.
17. A flash crash
caused by computer algorithms results in substantially reduced liquidity
and perpetuates a rapid move lower in the stock market.
18. Investor emotions (especially those of day traders) get out of hand and send traders running for the exit.
19. The unemployment rate, which is at a 49-year
low, begins to rise, signaling peak employment and the possibility of a
weakening economy.
20. Disruption in important oil-producing countries
causes crude prices to skyrocket or plunge. Either way, it could create
sticker shock or job losses and adversely impact the U.S. economy.
21. U.S. GDP data shows slowing growth, which, in turn, cools investor expectations for stocks, sending them lower.
22. Inflation comes in far lower than expected,
signaling that businesses have little pricing power. The prospect of
deflation could wreak havoc on corporate earnings, causing the market to
fall.
23. The U.S. debt ceiling is hit (yet again), but
the political divide in Congress becomes too great for lawmakers to
overcome, allowing the shutdown to perpetuate for months.
24. European debt crisis 2.0 hits, with countries like Italy unable to dig their way out of years of loose borrowing.
25. A widely followed pundit, such as Warren Buffett, sounds the cry of the stock market being overvalued.
In other words, there is no shortage of reasons the stock market could tumble from its recent all-time highs.
Bottom-line, however -it does not look good for the US Economy as the
deficit is coming close to a trillion US dollars.Impossible to pay it
back, unless by slashing government spending, and increasing taxes.
Unlike the trillion dollar budget deficits that occurred during the Obama administration that were temporary and largely the
result of the Great Recession, the Trump deficits that will soon reach and
exceed $1 trillion are permanent and will only get worse in the years ahead.
The
Trump deficits are the result of changes in federal spending and
revenue that will continue to be in place until some president and
Congress decide to reverse them, that is, to increase taxes and make
cuts to popular programs.
EU-Digest
