China Risk – one analyst points out that the greatest risk to China is not the much-talked-about trade war with President Trump and President Xi at the center, but the property market with a time arch of 12-months. According to Larry Hu, head of greater China economics at Macquarie, the property market risk is in fact the key risk. Real Estate investment accounts for about two-thirds of Chinese household assets, according to wealth manager Noah Holding – all this from an article posted on CNBC. Also, note that according to the National Bureau of Statistics data, domestic property prices overall have been rising for over three years, making this current streak the longest since 2008. There has been a ban implemented in Nanjing, and other cities. The downturn in the property market is a factor that not many people are talking about at 1. trade tensions and 2. slowing GDP are getting more media attention. China`s export-reliant economy is clearly vulnerable to attacks and threats from President Donald Trump. More on this later.
Turkey Risk – we at Classiarius have written several articles on Turkey this past week as the collapse of the Turkish lira captured headlines. More importantly, when we drill down, the twin deficits point to a country that has seen strong growth in the past 7 years, but at a price. There are more analysts who point out that Turkey`s economy has been mismanaged in the recent past, but it can be fixed. However, President Erdogan is reluctant to work with the IMF, as there will be strings attached that will force Mr Erdogan to rethink policy decisions.
Wall Street Bulls – On Tuesday in the US, the current Bull Market will be the longest since WWII, lasting 3,500 days. In 2018, we have seen solid GDP, a robust labor market, with inflation in check and of course solid earnings as President Trump has used tax cuts and other policy levers to extend and even amplify the US expansion. GDP is now at 4.1 percent, going from strength-to-strength. Some experts are saying that this current equity rally, is the final extension higher, and of course some warn that there are growing bearish warnings in the market. President Trump will likely find it more difficult to to prolong this rally in 2019 and 2020.