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CEOs of consumer-facing brands have been careful to align their companies in partisan Trump era politics. Here are some of the business leaders who have thrown dollars behind the President.
Investing.com - This week investors will be watching to see how the Federal Reserve may respond to recession fears whipped up by the inversion of the Treasury yield curve.
(Bloomberg Opinion) -- With support for globalization and free trade declining in much of the world, Asia has a historic chance to break out of its traditional role as a capital exporter to the West and to instead redirect flows to improve its own economies and financial industries.According to some estimates, the region’s pool of wealth at $110 trillion exceeds those of North America and Europe and is growing faster. Japan and China were at or near the top of foreign portfolio investment in the United States, including stocks and short- and long-term bonds, in 2017 with $2 trillion and $1.5 trillion respectively, a U.S. Treasury survey showed. Yet Asia has a poor record of protecting its assets stranded overseas when the cycle turns. In the 1990s, Japanese investors incurred significant losses, primarily on property. During the 2008 crisis, a range of Asian sovereign wealth funds and high net-worth individuals lost heavily on advanced economy shares, real estate, and mortgage-backed and structured securities.The desire to invest overseas partly reflects concern about political risk and governance at home. But leaving familiar territory brings other risks.Distance, language and cultural differences can put Asian investors at a disadvantage when it comes to information. As a result, investors often rely too heavily on intermediaries whose interests don’t align with their own.Their main failing, though, is a bias toward certain assets. In an echo of the ill-fated Japanese purchases of Rockefeller Center and the Pebble Beach golf course in the 1980s, Asian investors are buying prime office buildings in New York and London. Swanky apartments are quickly snapped up in world cities, especially by Chinese buyers.Lacking cozy domestic informational networks, Asian investors are particularly susceptible to chasing name asset managers or fashionable businesses. That restricts their options since the best funds are frequently closed to new arrivals. Managers often can’t repeat past results. Inadequate expertise frequently leads to unwise choices. In the run-up to 2008, Asian banks and investors suffered losses on purchases of structured products and collateralized debt obligations, or CDOs. High net-worth and retail segments are buying again. Japanese banks have purchased up to 75% of AAA tranches of collateralized loan obligations, and perhaps one-third of all CLOs, which have common features with CDOs.Where investments are leveraged, they must be financed by borrowing dollars and euros in wholesale markets. Losses may create difficulties in rolling over funding. As in 2008, forced sales and the lack of trading liquidity will accelerate declines in prices.Why look abroad at all? There is a mismatch between Asian savings and the size of domestic capital markets, which are marked by low returns, a smaller range of investment products and limited local expertise. The regional rivalries between Singapore, Hong Kong, Shanghai, Mumbai and Tokyo and a bias toward real industry have hampered the development of financial services.Asia lacks quality indigenous banks such as JPMorgan Chase & Co. or The Goldman Sachs Group Inc., or asset managers such as BlackRock Inc. or Pacific Investment Management Co. Most financial institutions are domestically focused. In 2018, assets under management at Asian hedge funds fell 10% to just over $100 billion, a mere 3% of the global total. Private wealth management remains the preserve of Western firms.Asia’s high savings are a global anomaly, driven by rising incomes, a culture of thrift and minimal social safety nets. Governments need to move with greater determination to enable more savings to be absorbed locally. The timing may be right as the world is tilting more toward national interests and self-sufficiency.The first step must be to accelerate development of capital markets to boost size, depth, liquidity and investment choices. Revised listing and issuance rules, harmonized pan-Asian regulations, breakups of family dominated conglomerates, and partial or full privatization of key state-owned firms would improve market depth. Changes in rules and tax incentives should encourage local pension funds or insurance companies to adopt stable, long-term investment practices.Second, the creation of world-class financial institutions and skilled asset managers needs to be a priority. To attract the best and brightest, limited career choices and pay that lags behind international levels need to be addressed. State-sponsored financial skills training and accreditation systems should be improved. A system of mutual recognition of qualifications would increase labor mobility.Finally, retaining capital within Asia requires improving confidence in the security of savings. Key steps include creating independent institutions free from political interference, as well as bolstering the rule of law and transparent and consistent regulations. Singapore and Hong Kong, despite its recent protests, are examples to emulate.Without change, the familiar cycle of exuberant foreign investment and the loss of Asian wealth is likely to be repeated in the next downturn. To contact the author of this story: Satyajit Das at email@example.comTo contact the editor responsible for this story: Patrick McDowell at firstname.lastname@example.orgThis column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Satyajit Das is a former banker and the author, most recently, of "A Banquet of Consequences."For more articles like this, please visit us at bloomberg.com/opinion©2019 Bloomberg L.P.
The minor range is .6677 to .6821. Its 50% level or pivot at .6749 is controlling the minor direction of the AUD/USD. Holding above this level is helping to generate a slight upside bias.
(Bloomberg) -- It’s hard enough to find a stock bull these days. But one sanguine enough about the economic outlook to forecast just one more rate cut this year? That’s a contrarian.While Goldman Sachs Group Inc.’s investment management arm is still waiting for better entry levels to buy the dip, it continues to favor equities and credit over government bonds in a rejection of growing fears of an imminent recession. The unit, which oversees about $1.7 trillion, expects the Federal Reserve to lower rates only once more in 2019 before eventually returning to a hiking cycle, versus the futures market that’s pricing in a good chance of three more cuts.Goldman’s stance goes against the consensus investor view that has triggered a rally in bonds while punishing stocks in August. Bond funds saw the fourth-biggest ever week of inflows through Aug. 14, while equity funds saw outflows, according to a Bank of America Corp. report.“We don’t subscribe to the view that this is the end of the business cycle,” said London-based executive director David Copsey, who is part of the global portfolio solutions group managing about $122 billion at Goldman Sachs Asset Management. “If our central thesis comes true -- which is economic growth continues to slow from an elevated level but remains around trend in the second half of the year and recessionary risk is low -- we would believe core inflation will gradually continue to grind higher.”Ripe for ContrariansWith global shares erasing $4 trillion this month, the riskiest credit buckling and government bonds reaching parabolic levels, the time seems ripe for contrarian bullishness. But it’s not for the faint of heart: securities have swung wildly all week between conflicting trade headlines and a bond market flashing recessionary signals.Copsey rejects several of the market’s glummest theses. An inverted yield curve isn’t always immediately followed by a recession, he stresses. In his view, the usual signals of fragility -- debt levels of households and non-financial corporations -- are still quite benign. The U.S. core personal consumption expenditure index, one measure of inflation, has been picking up, he notes.He also doubts the current impact of the U.S.-China trade war will be strong enough to end the global growth cycle.“There’s potentially a natural barrier on how bad things can get because ultimately while both sides have credible concerns and credible agendas that they’re looking to pursue, neither of them wants to ultimately negatively affect their domestic long-term growth prospects,” he said by phone late Thursday.Credit Suisse Group AG strategists too argue that the yield curve is not necessarily flashing a sell sign for equities. The most dependable signals still show a recession is unlikely before 2021, they wrote in a note Thursday, saying they are overweight European cyclicals -- some of the most beaten up stocks in this month’s sell-off.Some dip-buying was evident on Friday. The S&P 500 climbed 0.9% as of 9:42 a.m. in New York, while the Stoxx Europe 600 was up 1%.Within stocks, Copsey’s team is looking for shares with high dividends and dislocated value rather than exposure to the market’s broader direction or cyclical risk. Another contrarian view: it’s overweight Europe, especially economies such as Spain’s that are more domestically driven, as that region is cheaper and some temporary headwinds to growth should fade, he said. It’s neutral on the U.S. and emerging markets.As for government bonds, he says they’ve probably run their course.“The reaction from bonds is probably somewhat overdone now,” Copsey said. “To justify these yield levels and the market pricing of rate cuts, we would need to see a further deterioration in the growth data, beyond our current expectations.”(Updates market moves in 10th paragraph.)To contact the reporter on this story: Justina Lee in London at email@example.comTo contact the editors responsible for this story: Blaise Robinson at firstname.lastname@example.org, Namitha Jagadeesh, Jon MenonFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.
The Australian dollar has chop around during the week, showing signs of exhaustion, as the Australian dollar of course continues to suffer at the hands of the US/China trade war which seems to only be getting worse.
The Australian dollar tried to rally during the trading session on Friday again but continues to find sellers near the 0.68 handle. As we continue to consolidate, the market is trying to figure out whether or not we are going to be able to continue to see risk.
Walmart released impressive Q2 results yesterday. Its performance was driven primarily by its growth engines, the US and Walmex (mainly Mexico) regions.
Markets were lower during the beginning of the trading session on Aug 15, following China's comments of taking retaliatory measures against Trump's tariffs threat.
Strong consumer spending and a healthy labor market have been the saving grace for the U.S. economy, which is trying to avoid getting wrapped up in a global slowdown that’s already taken hold in China and Germany. “If we get a recession, it will be a slow motion accident, so there are opportunities to stop it and really change course,” Kristina Hooper, chief market strategist at Invesco tells Yahoo Finance’s “The First Trade.” “A lot of it has to do of course with trade policy, but it is not a foregone conclusion that a recession is occurring.”
Donald Trump foresees a recession in China if it does not forge a trade deal with the US. He has also said his tariffs are driving China’s slowdown.