In 2015, when air pollution was extreme, it was a contributing factor to 1.6 million deaths in China. That’s why EVs are a must, not just a fancy new technology they’d like to have around. Down under we have plenty of resource companies linked to EV technology. If one can gain a contract with a Chinese EV manufacturer, the shares could explode.
Aussie stocks bounced back strongly yesterday, and are set to open flat today, in a sign that the concern over a trade war is overdone. Perhaps Trump’s team have done their homework. Perhaps they now see that a ‘spend as much as you want’ policy in government doesn’t quite gel with ‘let’s reduce our trade deficit’.
The latest news to worry investors is the prospect of a trade war. The big problem here is that the post-Second World War global economy isn’t really designed for balanced global trade. It was for a little while. But as the US began to consume more than it produced in the 1960s, gold started leaving Fort Knox to balance the tab.
Clearly, there has been too much cash in asset markets over the past few years…especially in fixed income markets. But now, the Fed is concerned that this excess cash will show up in consumer price inflation — which is, apparently, a lot worse than asset price inflation. The bond market will feel the biggest impact of this tightening.
From a purely technical (charting) perspective, US stocks are due for a bounce. Like the price of bitcoin early last week, the S&P500 is now ‘oversold’. The important thing to watch here is how far the bounce takes stocks. If, for example, you see the market rally back to around 2,700 points and then run out of steam, I think you’ll see stocks subsequently fall to new lows.
In his big State of the Union address yesterday he laid down the plan - He’s going to increase the debt. A massive US$1.5 trillion infrastructure plan. Throwing good money after bad. Or should I say printing more money to pay off printed money. What to make of it all?
With Trump’s tax cuts now in effect, US capital outflows will increase significantly this year and beyond. Given the stronger activity this is likely to generate, the current account deficit will probably rise above US$500 billion again in 2018. In short, that’s a big supply of US dollars...
Overnight, the main US indices all traded higher. No one really knows why. But stocks are going up, and people just want to buy them before they go up even more. It certainly feels like a crowd mentality on Wall Street right now. The bulls are clearly in control.
If the debt ceiling doesn’t get raised, it means the US government can’t borrow more money. The risk then is that the Treasury might run out of money and literally be unable to make payments on US Treasury bonds. That’s the US government defaulting to every other nation, most notably China.
The Dow gained a whopping 24.8% over the course of 2017. Now, three weeks into the new year, the Dow has already cracked two new 1,000-point milestones. Economic data coming out of the US suggests the economy is robust. With that in mind, what can we expect from US markets this year?