China

  • 27 Oct
    A Global Risk Reward Perspective

    A Global Risk Reward Perspective

    • Emerging markets will grow faster than advanced economies, but there are many investing risks.
    • If a currency is at risk of being devalued 50% against the US dollar, over a decade you’d need an additional 7% yearly return to cover for it.
    • It is less risky to invest in emerging markets when there is pessimism than when there is euphoria.

    Introduction

    The World Bank revised its 2016 global economic growth forecast down to 2.4 percent from the 2.9 percent pace projected in January. The main reason for this downward revision came from lower commodity prices globally and soft investments in developed countries. But what’s important here is the divergence between the growth in emerging versus developed economies. More →

  • 15 Sep
    Troubled Waters Ahead For Developed Markets. Look Here For Returns.

    Troubled Waters Ahead For Developed Markets. Look Here For Returns.

    • Europe and Germany aren’t the best places for international diversification right now.
    • The U.S. is looking a bit better, but you’ll find the best opportunities are mostly in emerging markets.
    • Look for companies that are relatively cheap and that have exposure to China, India, and/or Brazil.

    Introduction

    Two days ago we discussed what is going on in the markets in relation to monetary policies. Today we will discuss what is going on in global economics.

    As the market is showing a high level of volatility, basic economic fundamentals is where we should look to get answers on what to do. By analyzing the latest global economic indicators, we can better determine the risk of a recession in the U.S. and Europe or a slowdown in China, all of which could contribute to a decline in global markets. More →

  • 06 Sep
    Headlines Are Telling Us To Worry, But Is It Time For Greed Instead?

    Headlines Are Telling Us To Worry, But Is It Time For Greed Instead?

    • Jobs look great, more people than ever are employed and the number is consistently growing.
    • There is nothing to worry about with China as it has room to grow and incredible potential.
    • Economic scares based on short term news provide great investing opportunities; the macro trends are what you should worry about.

    Introduction

    As investors it’s important to know what’s going on in the economy, but what has to be clearly differentiated are single data points and trends.

    We are constantly bombarded with pieces of information that can mean anything. Last Friday’s jobs report—with 151,000 new jobs—was below the 180,000 expectation of analysts. Headlines like the Wall Street Journal’s “Soft Jobs Data Cools Market Expectations on Fed Rate Increase” were seen on every news site, but such data seldom has an actual influence on your returns. More →

  • 29 Aug
    If You’re Thinking About Global Diversification, You Should Read This

    If You’re Thinking About Global Diversification, You Should Read This

    • The developed world is depending, and will continue to depend, more and more on the developing world.
    • The focus of productivity and GDP growth is in Asia.
    • The U.S. is the only country with trade deficits since 1976.

    Introduction

    Nobody knows where the market will go in the next week, month, or year, but what can give investors an edge is to look at macro trends that are bound to influence economies and returns on investments.

    In this article we are going to analyze productivity and trade balances among the most important global economic powers, and try to derive a long term trend from it in order to improve the international exposure in our portfolios. More →

  • 16 Aug
    Emerging Markets Are Hot – Here Is Where You Should Put Your Money

    Emerging Markets Are Hot – Here Is Where You Should Put Your Money

    • Emerging markets are up 10% since our last article on the subject, but the FED’s rate action might quickly erase the gains.
    • Valuations are starting to diverge, but don’t fight the trend.
    • Keep an eye on China as it is relatively undervalued and still boosts economic growth of 6.7%.

    Introduction

    In May we discussed how emerging markets have been rediscovered but are still undervalued. Since then, the emerging markets ETF is up 10%. More →

  • 05 Aug
    Where The Risks Are: It’s Not Where You Might Think…

    Where The Risks Are: It’s Not Where You Might Think…

    • Car sales are in a downtrend and PMI is falling, which ties the FED’s hands.
    • Japan has just entered into direct economic stimulus with $273 billion.
    • The Bank of England behaves like the economy is in a depression, cutting rates and printing money.

    Introduction

    Yesterday we discussed how China isn’t as big of a risk as many would like to make it out to be. Today, we are going to go through the latest data from the U.S., Japan and Europe in order to assess their riskiness. More →

  • 04 Aug
    Forget The News: If You’re Not Exposed to China, You Should Be. Find Out Why.

    Forget The News: If You’re Not Exposed to China, You Should Be. Find Out Why.

    • Don’t be scared by the news, China is growing strong and has incredible future prospects.
    • Temporary bumps are and will continue to be normal.
    • Portfolio diversification with China is essential for increased returns in the future.

    Introduction 

    Exactly a year ago fears around slower economic growth in China, the Yuan devaluation, and oil prices below $40 were the main catalyst for a market correction. The S&P 500 fell from 2102 points on August 17, 2015 to 1867 points on August 25, 2015. More →

  • 17 Jun
    Is Global Recession On Its Way? Brexit May Be A Warning Sign…

    Is Global Recession On Its Way? Brexit May Be A Warning Sign…

    • Global GDP growth rates are stalling even with increased monetary stimulus.
    • There are several potential recession triggers.
    • It is important to assess the risks a portfolio runs as no one can know when a recession will come, but eventually it will as it always has.

    Introduction

    The main FED goals are sustainable economic growth and full employment. In order to achieve those goals, the FED has decided not to increase interest rates as the economy is still relatively weak and employment has been slowing down. Not only that, but the expectation of future interest rate increases has been revised downwards. More →

  • 06 Jun
    Headline Rollercoaster: The Economic Limbo Continues

    Headline Rollercoaster: The Economic Limbo Continues

    • Europe and Japan continue with their easing policies as not much changes.
    • Chinese Purchasing Managers’ Index is positive but not far from stagnation.
    • US data flirts between a dead cat bounce and a stronger economic recovery.
    • Finding specific good investments should be the best answer to uncertain economic times ahead.

    Introduction

    Last week was an interesting one as it was filled with various economic news. It is important to summarize that news to see if it will move the needle as the market has moved only sideways since December 2014. More →

  • 18 May
    A Positive Note From Housing

    A Positive Note From Housing

    • Housing starts, positive homebuilders and a pickup in Chinese building all create a good feeling about the economy and markets.
    • Average house prices have increased but median prices show that the current situation is not even close to a bubble.
    • Rent prices are rising and therefore more buying is expected as people switch to buying instead of renting.

    Introduction

    Recent news about housing is positive. On Monday, the National Association of Home Builders reported the housing market index at 58 where a reading above 50 means that home builders have a positive feeling about the single-family housing market. Two days earlier, on Saturday, the Chinese National Bureau of Statistics reported that property investments in the first four months of 2016 rose 7.2% and construction starts gained 21.4%. And on Tuesday new housing starts came in at 1.17 million or 6.6% higher than in March. All of this is very positive news but the most important thing for investors is how this affects the economy and markets. As housing ignited the great recession, it is important to constantly be aware of what is going on in the housing market. More →

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