July 11, 2021….There is an old Wall Street Saying that “They don’t ring a bell at the top.” So investor sentiment, and optimism, is usually at the highest levels when markets reach critical turning points.
It may not be a bell but there seem to be several economic chimes going off these days, as the stock market indexes (S&P 500 and Nasdaq) make all time highs, almost day after day.
One tinkle I hear is the announcement by Wells Fargo Bank, that they are terminating, without warning ,all personal lines of credit. This is an 180 degree reversal for a big bank, that has been encouraging consumers to take out these lines of credit to pay off other debts, and to make purchases of goods and services. What does Wells Fargo Bank see on the horizon?
A second tinkle is the Chinese banking authorities, pushing new regulations to limit speculative activities of their big corporate businesses. Do they see excessive borrowing, and or, a shortage of liquidity in the system?
As a famous, and wealthy, money manager has said: “You don’t know who is swimming naked, until the tide goes out.” Warren Buffett, of Berkshire Hathaway fame.