As an investor – it’s very important to know the rules. For example, if the rules are constantly influx – it leads to uncertainty. With heightened uncertainty – you pull back. That’s what faces investors. For example, consider the following: (i) direction of monetary policy (e.g., as Powell raised concerns on inflation); (ii) A torrent of policy shifts from the White House; and (iii) major disruption with artificial intelligence – as investors question return on capital invested. Uncertainty in each of these buckets makes it hard to commit to stocks with conviction.
China
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Are Chinese Stocks ‘Investable’?
The recent rally of over 25% in Chinese was something we’ve not seen in over a decade. Beijing’s ‘stimulus blitz’ excited both institutional and retail investors alike. As context, China has struggled with deflationary pressures due to a prolonged real estate downturn and weakening domestic consumer confidence. In addition, a slew of economic data in recent months has missed expectations, raising worries the world’s second largest economy may not achieve its 5% full year growth target. The question is can the central government turn things around with more stimulus? I doubt it….
Will Falling Commodities Help Drive Inflation Lower?
Commodity prices are well off their peaks. In theory, this should lead to lower CPI in coming months. But is this more an indication of a recessionary risk? I think so…