Whether your financial goals are five or 50 years down the road, saving alone probably isn’t enough to achieve them. That’s why growth is such a critical component of most portfolios.
Not that long ago, U.S. stocks were the go-to investments for investors seeking aggressive growth. While U.S. stocks are still the bedrock of many portfolios, investors are now looking outside our borders for additional growth opportunities.
To the rest of the country it may seem like strange bedfellows: a state in the heartland of America on a first name basis with the world’s second largest economy. But for the past 30 years that has been the case between Iowa and China.
Since 1983, Iowa has been in a formal Sister State relationship with Hebei province, China.
While vastly different in language, culture and size—Hebei is 24 times bigger than Iowa in terms of population (72 million vs. 3 million)— over the years the cooperative agreement has fostered friendship, understanding and trust as well as exchanges in education, culture and, importantly, trade. Read more
With the recent increases in U.S. Treasury bond yields, some are decrying the situation as a disaster-in-the-making for Asian economies; however, we don’t subscribe to that view completely. While the levels of yields are indeed important, they’re only part of the picture; the pace at which yields change is also a critical factor. A gradual increase in the yields to 3% (the point at which we’ll cross the Rubicon, according to several commentators) wouldn’t spark a crisis for economies that have benefited from capital flows over the last few years – in effect, it would imply a further 50 basis point (bps) move higher in U.S. Treasurys from current levels, which isn’t necessarily a huge change.
The whole issue revolves around something called the “carry trade.” In its simplest form, that’s when you borrow money in a place with low interest rates, and invest that money in a place with higher interest rates in an attempt to capture the spread, or the difference between the rate levels. The worry is that with the yield differential between Treasurys and Asian government bonds diminishing, investors will abandon Asia and pile into the U.S. Read more
With the United States stumbling a bit in this week’s announcement of fourth-quarter GDP, it might be an appropriate time to ask the question, is it Asia that’s leading this global recovery? Generally, I’d agree with an assertion that Asia, particularly China, is somewhat driving the global economic recovery. While U.S. GDP was set back by some one-off issues with defense spending, China saw quarter-on-quarter growth of around 2%, driven by up-ticks in industrial output and a boost in exports late in the year. The smaller Asian economies are also doing very well, but none swings the lead that China does.
When contemplating Asia, it’s important to remember that the economic story in Asia, and above all in China, was one of a real estate and infrastructure boom; that is, until two or three years ago. Read more
There’s been quite a bit of talk about consumer confidence recently. Just today, the Thomson Reuters/University of Michigan survey of U.S. consumer confidence showed a move from 74.3 in August to 78.3 in September. Earlier in the week, the Conference Board Consumer Confidence Index posted at 70.3, up from August’s reading of 61.3. Surveys like these are seen as leading indicators for economic conditions. It’s sort of a demand-driven idea; the more positive consumers are about the economic prospects of the country, the more willing they will be to spend money on appliances, cars, houses, you name it. So, positive sentiment can presage an economic expansion. But what does that positive economic growth give back to consumers?