Posts Tagged "U.S. equity market"

The Dow Jones Industrial Average and the S&P 500 are up 15% and 20%, respectively, for the year, driving the value of U.S. stocks to a record of $32 trillion. United States’ household’s net worth is $113 trillion, far eclipsing the past peak of $71 trillion back in 2007 at the height of the housing bubble. Better domestic growth than elsewhere around the world, flush corporate profits, and accommodating capital markets are all positives for U.S. investors. These conditions have gone a long-way to lift asset values to today’s levels. Diving Rates — Blessing or Curse? The rise in asset…

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We discuss recent developments in the WCA Rising Dividend Equity portfolio.

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The U.S. – China trade war is taking a toll on both countries. United States manufacturing contracted somewhat in August, based on a survey from the Institute of Supply Management. Meanwhile, China reported a 16% slump in exports to the United States in August from a year ago. The trade war escalated last month as Washington announced a further 15% tariff on many Chinese goods from September, and China responded with reciprocal tariffs and currency devaluation. Winners and Losers We are not fans of trade protectionism. Tariffs and currency wars distort economic processes away from market solutions.  Consumers who buy…

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This is a third part of a series on China and trade. Part one, click here. Part two, click here.  From the early 2000s up to the financial crisis, debt levels surged in the United States. Borrowing allowed American households to consume not only from current income but from future income as well. The economy surged, but the borrowing led to problems and slower growth later on. But why did debt surge as it did? One possible explanation is that a growing trade deficit with China, and China’s rising trade surplus with the United States, was a root cause. Recall that…

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This is a second part of a series on China and trade. To read part one, click here.  CONQUEST update: Last week we raised gold to overweight and high yield to underweight in the core portion of portfolios on rising geopolitical and trade concerns. We’ve pointed out that China owes much of its growth to investment (not trade). As discussed last week, much investment is being subsidized by Chinese households. These subsidies have allowed China to grow well over 7% for many years. From the early 1980s, when China had very low levels of investment, to today, as investment rates…

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The WCA Fundamental Conditions Barometer’s forecast path slipped to an average reading of 55 from 60 this month (chart, the bottom of page). CONQUEST tactical equity allocations trimmed back to a slight overweight to align with the barometer. The main story of last week was the rise in trade concerns stemming from the threat of new tariffs and reprisals. This week we spend a few extra minutes discussing our view of trade issues, its causes, and potential outcomes. The Trade Mess — How Did We Get Here? Some simple economic accounting concepts can go a long way to trace the…

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China has been a major contributor to the global growth story in recent years, and has had a big impact on developments in foreign and emerging markets. As we’ve noted in previous commentary, we have been seeing some weakening in growth outside the United States while growth here remains strong. A 30% drop in the Chinese stock market, a sharp reversal in the Chinese currency, and slowing output growth all point to accumulating foreign sector weakness. Within China, the Chinese government has increased stimulus as evidenced by a recent surge in local government bond issuance (chart, below), and the Peoples…

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