A Singular Viewpoint

A Singular Viewpoint

John Hsu
/ Categories: Uncategorized

Global Overview , May 5, 2017

We continue to be bullish on global markets given certain events materializing. For the US, the major hurdle continues to be the repeal of Obamacare. Now that it is half done, its completion by the Senate has to be quickly followed by the much anticipated tax cuts. At the end of the day it is how secure the GOP will be come the 2018 elections.

The fact that Trump is so reviled among liberals also means that those liberals in the investment community can't see straight about what is going on in DC. In addition, we have the Fed normalizing rates! All this mish mash creates opportunity.

The overriding issue in Europe is unwanted immigration which isn't going away too soon. In the meantime Brexit will have its ups and downs. We have to contend with elections in France (this weekend), Germany and Italy. Again this creates opportunities for investment managers who are comfortable with the geopolitical side of the equation. In all probability the European Union will be a series of twists and turns, not only from a political but also from an investment point of view.

As for Japan the good news is that its currency and market are off the global radar so there are occasional trading opportunities. The bad news of course is that it has North Korea added to its long list of woes.

For China we have always felt that all the economic worries cited innumerable times over the last few years were false alarms. On the other hand, confrontation with the US especially with Trump in the White House would be a real crisis. The President in his global poker game seems to have taken that card from the table. The Chinese on the other side are playing the game beautifully, a la Mar-a-Lago.

They also seem to have gotten their economy in order. We are beginning to see a few 7+% GDP forecasts crop up. This will be the first upturn in quite a few years. As you can see from our numbers the China market is on the move, so this is the market that we are focusing on now. Although there are still a lot of nonbelievers, there is plenty of room to move up. There is another issue that is important. Given that China is the second largest economy in the world and there are 600 million Chinese racing towards middle class, take a look at the likes of the European luxury good makers such as LVMH. China, after all, is their ultimate market.

Although there are plenty of challenges, we believe there are also numerous opportunities going forward.
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