China drives Markets now … even Great Wall can’t shield us

watch china

If your intuition is being defensive, then our message should be well-received.

Nothing overly alarming, but we squarely observe that Markets are now lead by moves in:

  • China Commercial Paper
  • China Real Estate
  • Yuan/USD rate
  • Yen/USD rate

Therefore, please pay more attention to China now. As mild de-risking continues, we advise switching to a more defensive positioning:

  • Trim US Equities
  • Buy longer duration G7 Bonds (alert since Dec 28, 2016)
  • Buy longer duration EMM Bonds – Turkey, Mexico. Our model also likes Turkish Lira and Mexican Peso – so both currencies offer nice Yield and a likely FX appreciation.
  • Buy Gold (alert since Jan 17, 2017)
  • Buy more Growth-oriented equities (broadly speaking – Technology & Biotech)

Don’t get me wrong, the world is largely fine, but based on many indicators that we track, we are almost certain, you would be able to re-enter your positions better later.

In your view, what are the most under-appreciated risks to the Market now?

China drives Markets now … even Great Wall can’t shield us

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