In today’s Steady Investor, we look at key factors that we believe are currently impacting the market and what could be next for the markets such as:
Chilling Relations Between the U.S. and China – Tension between the U.S. and China has been on the rise, and escalations took place this week when China voted to impose national security laws on Hong Kong. The United States is yet to decide on a formal response, but all signs point to revoking Hong Kong’s “special status” as a trading partner. The move would amount to the United States no longer recognizing Hong Kong as a self-governing, autonomous region of China – a move that is likely to infuriate Beijing. This escalation comes as China is supposed to be fulfilling purchase obligations associated with the trade deal, and also as the U.S. steps up allegations against China for covering-up the pandemic. Chilling relations between the U.S. and China have some worried about a new cold war, which could be an extraordinarily costly outcome. China’s companies are massive customers for U.S. sophisticated technology, and supply chains are overwhelmingly dependent on Chinese factories and workers. Decoupling the two economies could mean higher costs for consumers and a hit to earnings for the U.S.’s largest corporations. This is coming at a time when China’s economic recovery could help jump-start the global economy. A private gauge of China’s services sector activity showed a sharp rebound in May, as domestic demand returned and as government stimulus took hold.1
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Assessing the World Economy and the Investment Landscape
The world economy is not out of the woods from this pandemic and the global economy is not likely to surge back to pre-crisis levels anytime soon. But the recovery is likely to take hold more quickly in some pockets of the economy versus others, and we will try to identify these pockets of relative strength.
In this report, we will also take a look at what countries and regions around the world are doing to restart the economy, while also highlighting several factors that are producing 2020 optimism right now.
If you have $500,000 or more to invest and want to learn more, click on the link below to get your free report today!
Click Here to Download Our Just-Released June Market Strategy Report2
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First Economic Recession in 28 Years – The developed world’s longest ongoing economic expansion may be coming to an end. For 28 years, Australia has never experienced a recession, defined as two consecutive quarters of economic contraction. But the longest streak may be in jeopardy. Earlier in 2020, some readers may recall the bush fires that ravaged Australia, which current estimates show may have resulted in a Q1 contraction of -0.3%. Second-quarter estimates for GDP contraction are almost certain to be lower, given the hit to consumer spending and services activity felt across the world as a result of the pandemic.3
Food Prices Move Higher as Supply Bottlenecks Continue – The United States has been feeling the pinch of a national meat-supply crunch, driven by supply-demand imbalances and supply chain issues tied to the coronavirus outbreak. Even as meatpacking plants reopen and some grocery stores implement limits on meat buying, prices for meat have been pushing higher over the last several weeks. At the retail level, beef prices went up +21.7% and pork prices rose +17.7% year-over-year for the week ending May 23, with chicken also jumping +10.5%. Production has been an issue – the U.S. food industry is going into the summer months with production 7% lower than it was at the same time last year, and with restaurants coming back online across the country, supply is likely to remain tight for the weeks ahead.4
Inside the World Economy and Investment Landscape: The world is still in the grip of the Covid-19 pandemic, and the global economy is not likely to surge back to pre-crisis levels anytime soon. Many investors are wondering what the recovery could look like across the globe. In our view, the recovery is likely to take hold more quickly in some pockets of the economy versus others.
In our June Market Strategy Report5, we take a look at what countries and regions around the world are doing to restart the economy and we try to identify these pockets of relative strength, while also highlighting several factors that are producing 2020 optimism right now.
If you have $500,000 or more to invest and want to learn more, click on the link below to get your free report today!
Disclosure