Just how much is political risk priced into stock markets right now? It’s an impossible question to answer, but it’s certainly heating up on the political front over in the US. Things are about to get very interesting.
With trade tensions escalating, future uncertainty has become too much for some. Yesterday I wrote about fund managers like Magellan increasing their cash positions. Magellan has not had this level of cash (18%) since 2009.
For over a year, shares in our big four banks have been trending down. Go back even further, and their share prices have barely moved in a decade. In May 2017, Australia’s largest bank (and biggest stock), Commonwealth Bank of Australia [ASX:CBA], got within a whisker of $88. Fast forward to June 2018, CBA’s share price traded below $68 — a fall of around 23%. It’s not just CBA feeling the pinch, though.
Trump believes that China's rise is a zero-sum game. One country must lose in order for another to win. But is this true? Can economic success actually benefit both nations?
In the face of Trump's taxes and threats, China is vowing not to back down. That means that the trade war will get worse before it gets better.
International currencies have all slipped against the US dollar. This means that global liquidity is tightening. So it's time to be cautious.
US markets remain healthy, while markets in Asia aren’t. Does this mean that the threat of a trade war will hurt China more than the US? Or is there more to the story?
Are tech stocks immune from a global slowdown? Well, they actually generate nearly 60% of their revenue from overseas. That makes them highly vulnerable to sanctions if the trade war does escalate.
You certainly know about Donald Trump's international conflict with China over trade tariffs. But do you know about the domestic trade conflict brewing with Amazon?
Everyone's feeling the heat from rising tariffs and higher interest rates. No one expects it to be pretty. It could end up being a long drawn out process that gets worse before it gets better.