What’s the biggest issue?……Interest rate hikes, oil prices, or China?
By Ty J. Young Editorial
In June we reported:
“The 3 major things to look for when [interest] rates do finally go up:
1) Dollar strengthens
2) Market [weakens greatly]
3) Economic fundamentals to remain broken – rate hikes will not undo the damage of the last 6 years, it will take some time to heal the decoupling of main street and Wall Street. Where should you be when rates are hiked, the correction finally comes, and the market pays the piper?”
Interest rates are no longer influenced primarily by market forces, but the voting blocs in the Federal Reserve. Many thought we would see an interest rate lift-off announcement this week – but they still didn’t pull the trigger.
What about oil prices? Are they affecting your money? Three market factors are placing downward pressure on oil prices:
1) Strengthening dollar
2) Declining demand
3) Massive expansion in energy production, specifically here in the US.
This is predictive of slowing and/or negative growth, but declining gas prices may save you money at the pump.
But it is China we warned most about, saying this in July:
“….To put it simply, Chinese credit risk is 5 TIMES worse than where we were right before the banking collapse and financial crisis of 2007/08. These numbers have US analysts very worried. This is not a Gold commercial – this is happening right now.”
Our China concerns continued unabated this week –
1) 27% drop in the Chinese stock market since the high, 8% drop on Monday alone.
2) Most analysts see more downward pressure and more room to drop. ( http://news.yahoo.com/rollercoaster-china-stock-market-more-room-drop-071444449–finance.html ).
3) Volatility is rampant across all Chinese indices.
So the biggest issue???? Still China.
Buying opportunity? We don’t think so. We consider this Chinese stock market collapse, combined with slowing growth, a reason for caution. Is your retirement money exposed to the constant changes in the global economy? Do you want your money protected against losses? Call our wealth managers today!