Daily Gains Letter

Chinese economy


Europe the Best Short-Term Investment Opportunity Outside the U.S.?

By for Daily Gains Letter | Mar 18, 2015

Short-Term Investment OpportunityRegular readers of mine will know that I used to be bullish on China; I thought the Chinese economy offered a good contrarian investment opportunity. Now, I’m turning my sights to the eurozone for the top potential investment opportunity outside the U.S.

Here’s why…

Chinese Economy in 2015 Losing Steam

You don’t have to be behind the Great Wall of China to realize there are deeper issues brewing in the country of 1.3 billion people. Since assuming the role of the second-largest economy in the world, China’s economy has been caught in a downdraft, with weaker gross domestic product (GDP) growth and broad stalling across the board. There must be something about being number two. Prior to China, Japan held onto that position in 2010 and look what happened to its economy. Germany was third, but has been wallowing in the eurozone, as it spent its energy trying to save Greece and its poorer cousins in the PIIGS nations (Portugal, Italy, Ireland, Greece, and Spain).

As many of you know, I have long been a bull on China, but even my sentiment has been eroding. I expect my bullishness to continue to decline, too, at least for the foreseeable future, until the country can turn things around.

A few weeks ago, the Chinese government cut its GDP growth outlook for the country to seven percent, down from 7.5% in 2014. Now the real number is likely below seven percent, based on what we have been seeing in the Chinese economy. The two-month period of January to February pointed to more evidence of the slowing in China, with weaker-than-expected results in … Read More


What China-Japan APEC Talks Could Mean for Investors

By for Daily Gains Letter | Nov 12, 2014

China-Japan APEC Talks Could Mean for InvestorsThe annual Asia-Pacific Economic Cooperation (APEC) summit started on Monday in Beijing, and I bet there will be a lot of discussion on the state of China and Asia in the global economy.

My readers all know the impact of China on the global economy, as I’ve written on its relevance before. If China fails, so will the global economy, including the United States and the fragile eurozone. Russia is already looking to extend its economic ties beyond the Great Wall.

Yet it’s clear the country that gave us spectacular double-digit gross domestic product (GDP) growth for years is now struggling. The Chinese economy has already seen its growth slow, coming in at 7.3% in the third quarter, the slowest pace since 2008. And it isnow threatening to fall short of the 7.5% target set by the government. At this point, it doesn’t look like the target will be met. In fact, there are whispers that the target could be cut to seven percent in 2015 if the global economy doesn’t experience a stronger recovery.

Pundits and China bears have been calling for the great collapse of China, specifically in the real estate and financial spaces. Yes, there is softness here, but we have yet to see a bigger crack form. You can bet the Chinese government will do whatever is necessary to reinforce its economy’s weak points. And China can definitely do this, given the fact that the country has about $3.0 trillion in reserves.

President Xi Jinping, who is in his second year of his 10-year term, knows the country needs to spread its wings globally. That is … Read More


My New Strategy for China’s Slowing GDP Growth

By for Daily Gains Letter | Oct 24, 2014

China’s Slowing GDP GrowthAs many of my long-time readers may already know, I have been bullish on China and Chinese stocks for some time. However, I’m now thinking that there could be some growth issues forming in the shadows—but that doesn’t mean there isn’t an opportunity to profit.

We have been seeing some obvious signs surfacing that suggest China’s economy is stalling, but we really don’t know the true underlying gross domestic product (GDP) growth rate in the Chinese economy.

According to the National Bureau of Statistics, China’s GDP grew at an annualized 7.3% in the third quarter, the slowest growth in five years and down from the 7.5% reached in the second quarter. The growth is also increasingly near the seven-percent threshold, which is a psychological level we have been monitoring.

Now, these are the numbers coming out of China, so there are some concerns that the readings may have been massaged to some degree to meet our expectations. I’m not saying with 100% confidence that the reading is false, but with China’s past record of false reports from Chinese companies, you have to wonder if the actual growth may be closer to the seven-percent level—or even below, as some market pundits believe.

In the end, it wouldn’t surprise me if the country’s GDP numbers were lower. China has been struggling with weak demand for the amount of commercial and residential real estate that has been—and continues to be—built around the country. There’s wide evidence of many offices and condominiums sitting empty with no market.

China has been building over the past decades to drive its industrial revolution that has made it … Read More


How to Hedge Against a Stalling Global Economy

By for Daily Gains Letter | Sep 17, 2014

Stalling Global EconomyThe stock market charts are showing some hesitation once again following the recent technical breaks to new record-highs for the S&P 500 and Dow Jones Industrial Average.

On the charts, the blue chip DOW is back below 17,000. Its continued failure to hold after breaking above 17,000 for the fifth time is a red flag that suggests more weakness and vulnerability could be in the works for the stock market on the horizon.

Small-cap stocks are also subject to some selling again with the Russell 2000 declining to below both its 50-day and 200-day moving averages on Monday morning. The breach of the moving average is worrisome. The index will need to find support at current levels or risk a fall to the 1,140 level.

Here are the issues I see for the stock market at this time. While I still see potential higher gains ahead for the stock market, there are also some indications of a possible stock market correction around the corner.

You may be seeing targets for the S&P 500 rise, but I feel there could likely be some pausing and weakness ahead of this.

The surfacing of soft economic news for the global economy is a concern for economies worldwide, including the U.S. economy, and overall economic growth.

The European Central Bank (ECB) recently launched fresh stimulus for the eurozone. Clearly, this is needed. The Organisation for Economic Co-operation and Development (OECD) just cut its outlook for the eurozone’s gross domestic product (GDP) growth, revising it to a paltry 0.8% this year and 1.1% for 2015. Folks, this is weak and in my view, it indicates … Read More


How to Position Yourself as China Becomes World’s Biggest Economy

By for Daily Gains Letter | Sep 10, 2014

How to Play the Rally in Chinese StocksI’m not sure how many of my Daily Gains Letter readers realize that Chinese stocks, as reflected by the Shanghai Composite Index (SCI), have outperformed the S&P 500 so far this year. After offering up underwhelming performances since 2009, the SCI has rallied 9.98% this year, compared to 8.44% for the S&P 500 and 3.23% for the Dow Jones Industrial Average as of Monday.

We’re not talking about resurgence in Chinese stocks and a return to the glory days more than five years ago; instead, I’m simply saying there’s finally some buying in an oversold Chinese stock market.

Shangai Stock Exchange Composite Index Chart

Chart courtesy of www.StockCharts.com

Of course, there’s the high anticipation of China-based Alibaba (NYSE/BABA) joining the U.S. capital markets on September 19; this move will likely stroke the enthusiasm of investors here. The Internet services company is massive and will give U.S. companies a run for their money, further opening the U.S. market to consumers and businesses worldwide. You can wait and pick up shares of Alibaba or you can play the company via Yahoo! Inc. (NASDAQ/YHOO), which holds a 23% stake in Alibaba.

Now, if you’re a regular reader, you may know that I have been, and continue to be, bullish on the Chinese economy and China. Yes, the economy is stalling, but we are still talking about growth of around 7.5% this year, which is far greater than the rest of the G7 countries.

Just like Facebook, Inc. (NASDAQ/FB) in the social media market with its more than one billion users and enormous potential, I feel the same towards China and its 1.3 billion people. When you have a market … Read More


Depressed Copper Prices Presenting Perfect Buy-Low, Sell-High Opportunity?

By for Daily Gains Letter | Mar 26, 2014

Copper Prices PresentingBy now, you have probably noticed one phenomenon: the speculations regarding China’s growth are increasing each day. Turning on the TV or flipping through the pages of the newspaper, you’ll likely hear and read all about how the second-biggest economic hub in the global economy will tumble.

No doubt, the arguments backing this argument are very credible. The Chinese economy is seeing an economic slowdown and troubles in that country continue to gain strength. For example, the Chinese manufacturing sector is stalling. In March, the HSBC Flash China Manufacturing Purchasing Mangers’ Index (PMI) declined to its lowest level in eight months. The output index declined to an 18-month low. (Source: “HSBC Purchasing Managers’ Index Press Release; Output contract at quickest pace in 18 months during March,” Markit, March 24, 2014.)

We have seen a few companies in the Chinese economy default on their bonds, and there are fears that more will soon fall. The widespread speculation is that the government might not come to the aid of those companies that are in trouble.

With this, investors are panicking. One of the hardest-hit asset classes due to this panic is copper. Please take a look at the chart of copper prices below.

Copper - Spot Price Chart

Chart courtesy of www.StockCharts.com

Since the beginning of the year, copper prices are down more than 13% and investors believe demand for the red metal will continue to decrease due to the decline in manufacturing. During the past decade, China was building massive infrastructure and a significant amount of copper was needed as a result. This is not the case anymore.

Copper prices have broken below a key level—$3.00—and … Read More


How to Profit from China’s Economic Slowdown

By for Daily Gains Letter | Mar 13, 2014

China’s Economic SlowdownThere’s a significant amount of pessimism towards the Chinese economy these days, and the reasons behind this are very understandable. The economic data suggests the country is headed toward an economic slowdown.

In 2013, China’s gross domestic product (GDP) grew by 7.7%—barely better than the previous year and the estimates that were calling for the lowest growth rate since 1999. (Source: Yao, K. and Wang, A., “China’s 2013 economic growth dodges 14-year low but further slowing seen,” Reuters, January 20, 2014.) Keep in mind that despite beating the estimates, this GDP growth rate is much lower than the country’s historical average.

This isn’t all. A credit crunch is also in the making. We are now hearing how companies in China will have troubles paying their interest on the bonds they have issued. So far, we have seen one default on payment by Shanghai Chaori Solar Energy Science & Technology Co. This solar company, based in China, defaulted on a $14.7-million interest payment on bonds it issued two years ago. (Source: Wei, L., McMahon, D. and Ma, W., “Chinese Firm’s Bond Default May Not Be the Last,” The Wall Street Journal, March 9, 2014.)

Before this default, there was a slight hope that the government would come in and bail out the troubled companies—something that happened in the U.S. economy during the financial crisis in 2008. Now, with this default, there are speculations that we will see more of the same.

Furthermore, there are concerns that property values in the Chinese economy are going to see a correction. Over the past few years, there has been the mass development of ghost … Read More


Three Reasons to Buy Gold Now

By for Daily Gains Letter | Mar 12, 2014

Buy Gold NowWhen it comes to gold bullion prices, despite their mere 10% climb since the beginning of 2012, I wouldn’t be at all surprised to see gold bullion prices increase even further. With this, companies producing or looking for the precious metal are still presenting a great buying opportunity.

Let me explain…

We see demand for gold bullion continues to increase, and at the same time, supply constraints are slowly starting to show. This is something I have been talking about for some time now and at the very core, it is the perfect recipe for higher gold bullion prices ahead.

In 2013, we learned that the Indian government and the central banks have been working together to curb the demand for gold bullion in that country. This was a concern to many because India was the biggest consumer of the precious metal at that time. As a result of this, emotions took over, and we saw massive selling. A little-known fact that never made the mainstream: though the official demand for gold bullion declined, smuggling the precious metal into the country became the next big thing.

According to the World Gold Council (WGC), smuggled gold bullion in the country amounted to 150–200 tonnes in 2013. The WGC also predicts that if the restrictions imposed by India’s government remain in place, then it wouldn’t be a surprise to see an increase in the amount of gold bullion smuggled into the country. (Source: “UPDATE 1-Gold smuggling in India likely to rise if curbs stay-WGC,” Reuters, February 18, 2014.)

But this is just the tip of the iceberg.

We see uncertainty in the … Read More


Can This Precious Metal Save Your Portfolio from the Rising Tensions in Crimea?

By for Daily Gains Letter | Mar 5, 2014

key stock indicesThese days, we have been hearing a significant amount of news out of Ukraine. “Pro-Russian troops” are now in control of the security and administrative systems in the Crimea region, which is the mainly Russian-speaking area of the country. World leaders are saying that this is nothing but an act of aggression by Russia, saying that at the very least, the situation is worsening each day and it’s very unpredictable what could happen next.

As a result of the uncertainty, key stock indices here in the U.S. are sliding lower—mind you, the Ukraine is neither a major trading partner with the U.S. nor is it a country in which a lot of American-based companies operate. Considering this, one must wonder why key stock indices are seeing selling then at all.

Here’s what investors really need to know…

It all comes down to this: the Ukraine/Russia issue is a problem for the global economy, with which the key stock indices are highly correlated. If the global economy as a whole faces an issue, then the key stock indices slide lower. This is something investors have to keep in mind.

Ukraine is just one of the issues for the global economy that we see in the news; there are others, which investors need to know about, that may have even more gruesome consequences on the key stock indices than now.

For example, the Chinese economy isn’t getting much attention these days, but we see manufacturing activity in the country is continuously declining. This shows that the demand is slowing down and it will impact the bottom-line of companies on the key stock … Read More


Why Canadian Oil Plays Are More Attractive Than Their U.S. Counterparts Right Now

By for Daily Gains Letter | Feb 25, 2014

Canadian Oil StocksWhile the U.S. economy is hardly on solid footing, the fact remains that as the world’s biggest and most influential economy, the U.S. doesn’t have to be running optimally to keep the global economy chugging along. Though, it would be nice if the U.S. economy would gain sustainable traction. Until then, we will have to be content with its glacial pace of recovery.

And it is slow. In 2012, gross domestic product (GDP) growth was 2.8% and in 2013, it slowed to just 1.9%. Things are expected to get better over the next two years. U.S. GDP growth is forecast to hit 2.8% in 2014 and an even three percent in 2015.

The rest of the world will be playing catch-up. Well, save for the Chinese economy, which has a 2014 growth forecast of 7.5%. GDP growth in the eurozone picked up 0.3% in the fourth quarter of 2013—the third quarter of growth since the end of an 18-month recession. (Source: “Eurozone GDP growth gathers speed,” BBC News web site, February 14, 2014.)

The International Monetary Fund (IMF) forecasts that India’s GDP growth will hit 4.6% this year and climb to 5.4% in 2015. Brazil recently revised its 2014 GDP growth rate from 3.8% to 2.5%—which is still higher than analysts’ GDP growth forecasts of 1.79%. (Sources: Mishra, A.R., “IMF says India needs more rate hikes to bring inflation down,” Livemint.com, The Wall Street Journal, February 20, 2014; “Brazil cuts 2014 budget, GDP estimate,” Buenos Aires Herald web site, February 21, 2014.)

For investors who have been waiting for a broadly based global recovery, these are encouraging signs. It also … Read More


As Investors Grow More Skeptical Toward Stocks, Time to Move to Safe Haven ETFs?

By for Daily Gains Letter | Feb 19, 2014

Safe Haven ETFsWe see there’s a significant amount of economic news mounting against the argument that key stock indices will go higher this year. We see major companies on the key stock indices reporting corporate earnings that are dismal to say the very least. We see indicators of prosperity suggesting the opposite is likely going to be true for the U.S. economy. Lastly, we also see troubles developing very quickly in the global economy.

First on the line are the corporate earnings of companies on the key stock indices—which is hands down one of the main factors that drive these indices higher. We see companies showing signs of stress. Consider General Motors Company (NYSE/GM), for example; the company’s corporate earnings declined 22% in 2013 from the previous year. (Source: “GM reports lower-than-expected 4Q earnings,” Yahoo! Finance, February 6, 2014.)

Some might call this a story of the past; we need to look at what the future looks like instead. Sadly, going forward, companies on the key stock indices and analysts look worried as well. Consider this: so far, 57 S&P 500 companies have issued negative corporate earnings guidance, while only 14 have issued positive guidance. At the same time, analysts’ expectations are coming down as well. On December 31, the consensus estimate expected S&P 500 earnings to grow by 4.3%; now, these expectations have come down to 1.5%. (Source: “S&P 500 Earnings Insight,” FactSet, February 7, 2014.)

Looking at the broader U.S. economy, it’s not moving in favor of the key stock indices, either—the economic data isn’t looking very promising.

Industrial production in the U.S. economy declined in January from the previous … Read More


Top Investor Safe Havens for Protection Against Collapsing Economic Growth

By for Daily Gains Letter | Jan 29, 2014

Economic GrowthTroubles in the global economy look to be strengthening, suggesting an economic slowdown may be following. Not only are the major economic hubs of the global economy showing signs of stress—something I have mentioned in these pages many times before—but we see demand slowing down as well.

The Baltic Dry Index (BDI) gives us a general idea about how the demand in the global economy looks. At the very core, this index tracks the shipping price of raw materials. If the shipping prices increase, it suggests there’s increased demand in the global economy. If they decline, it’s not really a good sign. Please look at the chart of the BDI below.

Baltic Dry Index Chart

Chart courtesy of www.StockCharts.com

The BDI is outright collapsing. Since the beginning of the year, the BDI has declined more than 42%. This shouldn’t be taken lightly because it suggests demand in the global economy is slowing down very quickly. Looking at the average change in the BDI in January since 2003, this decline in 2014 is the second-biggest on record—in 2012, the BDI collapsed 58% in January.

Another indicator of demand in the global economy I look at is the Chinese economy. It has been known as the manufacturing hub of the world, and the country exports a significant amount of its goods to the world. If we see manufacturing activity in that country slow down, it gives us a hint that a global economic slowdown may be following.

Consider this: In January, the HSBC Flash China Manufacturing Purchasing Managers’ Index (PMI)—an indicator of manufacturing activity in China—plunged to a six-month low. It was registered at 49.6 in … Read More


Why Global Economic Growth Is Falling Apart Again

By for Daily Gains Letter | Jan 22, 2014

Global Economic GrowthIt seems the global economy is taking a wrong turn. If it continues on the path it’s on now, it will not be a surprise to see a pullback in its growth. As a result of this, U.S.-based global companies may see their revenues and profits fall, which eventually leads to lower stock prices. You have to keep in mind that the U.S. economy is highly correlated with the global economy.

First, it seems that the demand in the global economy is slowing down as we enter into 2014. One of the indicators of demand in the global economy I look at is the Baltic Dry Index (BDI). The BDI is an index that tracks the shipping price of raw materials. If the index declines, it means demand in the global economy is slowing. If the BDI increases, it suggests the global economy may see an influx in demand. Below is the chart of the BDI. Note that since the beginning of this year, the index has collapsed more than 32% (as indicated by the circled area in the chart below).

Baltic Dry Index Chart

Chart courtesy of www.StockCharts.com

But that isn’t all. We continue to see dismal economic data out of the major economic hubs of the global economy, too.

China, the second-biggest economic hub in the global economy, is showing signs of slowing down. The Chinese economy in the fourth quarter of 2013 grew at an annual pace of 7.7%. In the third quarter, this growth rate was 7.8%. (Source: “China’s Expansion Loses Momentum in Fourth Quarter,” Bloomberg, January 20, 2014.) Although this growth rate may sound very impressive when compared to … Read More


The Economic Slowdown No One’s Talking About

By for Daily Gains Letter | Jan 21, 2014

The Economic Slowdown No One’s Talking AboutIt seems major economic hubs in the global economy are facing hardships, and they are moving towards an economic slowdown. But during discussions about where the next trading opportunity will be, some countries never get mentioned. For example, there is significant talk about an economic slowdown in the Chinese economy and the Japanese economy and how investors can profit. However, the Australian economy goes unnoticed even though it’s facing an economic slowdown as well, and it looks like conditions in the country are getting worse.

Unemployment in the Australian economy is increasing. The Australian Bureau of Statistics reported that in December, the country’s unemployment rate increased to 5.8%—0.1% higher from the previous month. The number of those employed full-time declined by 31,600. Part-time workers increased in the month, and the unemployed increased by 8,000 in December, reaching 722,000. (Source: “Australia’s unemployment rate increased slightly to 5.8 per cent in December 2013,” Australian Bureau of Statistics web site, January 16, 2014.)

The demand for work in the Australian economy is also very slow—a classic situation during an economic slowdown. Job advertisements in the country declined 0.7% in December after declining 0.8% in November. For the year, job advertisements in Australia have declined by nine percent. (Source: Kwek, G., “Job ads: signs of stabilisation,” Sydney Morning Herald, January 13, 2014.)

Another indicator of an economic slowdown, manufacturing activity is not so great in the Australian economy either. The Australian Industry Group Australian Performance of Manufacturing Index (PMI)—an indicator of manufacturing in the Australian economy—contracted for the second consecutive month. The index sat at 47.6 in December. (Source: “Manufacturing Remains in Contraction,” Markit … Read More


How Investors Are Profiting as the Eurozone Crisis Makes a Comeback

By for Daily Gains Letter | Nov 21, 2013

Investors Are Profiting as the Eurozone CrisisMajor economic hubs in the global economy are in outright trouble, and each passing day there’s more economic data suggesting the slowdown is holding its own. Investors need to be wary about what’s happening, because it can affect their portfolio significantly.

The eurozone crisis, which sent ripple effects into the global economy, is rising again. In the early days of the eurozone crisis, we heard how the economies of such nations like Greece, Spain, and Portugal were suffering. Now, the bigger nations in the euro region are showing signs of stress. Consider France, the second-biggest economy in the eurozone, for example. This major economic hub in the global economy witnessed contraction in the third quarter. On top of this, France’s unemployment rate continues to increase.

Germany, the biggest economy in the eurozone and the fourth-biggest economic hub in the global economy, slowed in the third quarter. The gross domestic product (GDP) of the country increased just 0.3% in the third quarter. In the second quarter, Germany’s GDP increased by 0.7%. (Source: “Gross domestic product up 0.3% in 3rd quarter of 2013,” Destatis, November 14, 2013.)

Similarly, Japan, the third-biggest nation in the global economy, continues to struggle, despite the extraordinary measures the central bank and Japanese government have taken to boost the economy. In the third quarter, the growth rate of the Japanese economy slowed down. The GDP grew 0.5% from the previous quarter. The annual GDP growth rate of the Japanese economy was 1.9% in the third quarter. (Source: “Gross Domestic Product: Third Quarter 2013,” Cabinet Office, Government of Japan web site, November 14, 2013.)

Adding more to the … Read More


Profit from Emerging Markets with Just One Investment

By for Daily Gains Letter | Nov 12, 2013

Profit from Emerging MarketsEmerging market equities have taken center stage these days because, according to some, the key stock indices in the U.S. economy are reaching the overpriced mark. Investors’ returns aren’t going to be as robust going forward; there’s a significant amount of noise about them taking the shape of a bubble.

With all this happening, investors are asking which emerging market economy they should invest in. Should they buy companies operating in India? Or is China still the best emerging market economy in which to invest?

The answer to this question is not as easy as it may seem to some. Investors have to keep in mind that each emerging market is unique—it presents different opportunities, risks, and rewards.

Take China, for example. As key stock indices in the U.S. economy have increased this year—the S&P 500 is up more than 23% so far—the stock market in the Chinese economy hasn’t performed as well; in fact, the key stock indices there have declined. Please look at the chart below: the Shanghai Stock Exchange Composite Index has declined more than 6.4% between January and October.

Shanghai Stock Exchange Composite Chart

Chart courtesy of www.StockCharts.com

Does this mean there’s room for growth? Don’t be too quick to judge. The Chinese economy is going through a bit of an economic slowdown. This year, the country’s gross domestic product is expected to increase much less than its historical average; the growth of the Chinese economy is projected to be lower next year as well. At the same time, there’s noise stating that there may be a credit crisis in the country.

If all of the trouble growing in the Chinese … Read More


A Global Issue That Could Damage American Stocks

By for Daily Gains Letter | Oct 11, 2013

Damage American StocksThe global economy looks to be in trouble, with the problems brewing quickly. Major economic hubs in the global economy are struggling for growth, but are failing—a fact that is largely ignored by the mainstream.

Long-term investors need to know that an economic slowdown in the global economy can deeply affect the key stock indices here in the U.S. economy. The reason for this is very simple: American-based companies operate throughout the global economy. As a matter of fact, in 2012, for the S&P 500 companies that provide data about sales in the global economy, 46.6% of all sales came from outside of the U.S. (Source: “S&P 500 2012: Global Sales – Year In Review,” S&P Dow Jones Indices web site, August 2013.)

Clearly, if there is an economic slowdown, the demand will decrease and the U.S.-based companies will sell less and earn less profit. As a result, their stock prices will decline.

So what is really happening?

In the beginning of the year, there was a significant amount of noise about how the global economy will experience growth. This did not happen.

The International Monetary Fund (IMF) expects the global economy to grow by 2.9% this year after seeing growth of 3.9% in 2011 and 3.2% in 2012. In 2014, the IMF expects the global economy to increase by 3.6%. (Source: Duttagupta, R. and Helbling, T., “Global Growth Patterns Shifting, Says IMF WEO,” International Monetary Fund web site, October 8, 2013.) Mind you, these estimates were much higher in July, but they have since been revised lower.

We all know how anemic the rate of growth of the U.S. … Read More


What You Need to Know to Protect Yourself from the Global Economic Slowdown

By for Daily Gains Letter | Aug 1, 2013

Global Slowdown to Disrupt Your PortfolioThe global economy is showing traits that shouldn’t go unnoticed by investors. Instead, investors should keep a close eye on their portfolio and make sure they are managing their risk properly by not being overexposed to a certain region, having their assets allocated in different asset classes, and having stop orders in place for their doubtful positions.

Investors need to know that companies trading on the key stock indices have exposure to the global economy; this means their stock prices can suffer.

The global economy looks to be heading towards a period of stagnant growth or an outright economic slowdown. The reason behind this notion is very simple: countries across the board in the global economy are witnessing anemic growth, and the demand is declining.

For example, consider India, one of the well-known emerging markets in the global economy. The central bank of India expects the country to grow by 5.5% in the fiscal year ending March 2014. This was lower than the central bank’s earlier forecast of 5.7%. (Source: Goyal, K., “India Central Bank Holds Rates in Push to Stem Rupee Plunge,” Bloomberg, July 30, 2013.)

In June, industrial output in the third-biggest hub in the global economy, Japan, fell 3.3% from a month earlier. This was the first time in five months that industrial output in the country fell; it had increased 1.9% in May. (Source: “RPT-Japan June industrial output falls 3.3 pct mth/mth,” Reuters, July 29, 2013.)

In addition to this, in the same month, the country’s retail sales also didn’t register as expected. Retail sales in the Japanese economy increased only 1.6%, compared to the 1.9% … Read More


How Smart Investors Can Benefit from the Current Global Economic Slowdown

By for Daily Gains Letter | Jul 18, 2013

Current Global Economic SlowdownIt is becoming very evident that the global economy is marching towards a period of major turbulence. I see both established and emerging economic hubs in the global economy struggling, and if it continues, then economic slowdown becomes inevitable.

Consider the estimates of growth in the global economy by the International Monetary Fund (IMF). It expects growth in the global economy to be as stagnant as 2012, forecasting a growth rate of a little over three percent. The IMF expects emerging economies to grow by five percent in 2013 and about 5.5% in 2014. (Source: “Emerging Market Slowdown Adds to Global Economy Pains,” International Monetary Fund web site, July 9, 2013.)

But with what we are already seeing, these estimates might just become obsolete, and the IMF might once again lower its forecast for the global economy.

For example, consider the Chinese economy, the second-largest economic hub in the global economy. It grew at an annual pace of 7.5% in the second quarter of this year from a year earlier—a decrease from 7.7% in the first quarter. The Chinese economy’s performance in the second quarter was the slowest in the last three quarters and marked the longest streak of growth rates below eight percent in at last 20 years. (Source: “China Growth Slows to 7.5% as 2013 Target Under Threat,” Bloomberg, July 15, 2013.)

China is performing well below its historical average. It wasn’t uncommon for the Chinese economy to grow at an annual pace of more than 10% in recent years.

The problems for the global economy don’t end there, as the troubles in the eurozone still continue. And … Read More


How to Profit as Major Economic Hubs Struggle for Growth

By for Daily Gains Letter | Jun 5, 2013

Profit as Major Economic Hubs Struggle for GrowthThe global economy seems to be in trouble. Some of the major economic hubs are showing deep concerns about their growth, while others are in outright economic misery and are registering poor economic performances.

China, the second-biggest hub in the global economy, is expected to grow at a much lower rate than its historical average. The International Monetary Fund (IMF) predicts the Chinese economy to grow 7.75% this year, lowering its prior forecast of eight percent. (Source: “IMF cuts China growth forecast to 7.75% in ’13,” China Daily, June 3, 2013.)

In 2012, the Chinese economy grew at the pace of 7.8%. Sadly, while this growth rate does look impressive for developed nations like the U.S., it was the slowest China had experienced in 13 years.

Japan, the third-biggest nation in the global economy, is experiencing a recession. The Bank of Japan has taken a severe approach to bringing the Japanese economy up to par, but it continues to fail. Exports from the Japanese economy remain stagnant, despite its currency falling more than 12% since the beginning of the year.

Bringing attention to the eurozone, it remains under severe stress. This time around, as the common currency region is in a recession once again, it’s not only the debt-infested nations that are suffering; the strongest and most major economies are also struggling for future growth.

Germany, the fourth-biggest economy in the world and the biggest in the eurozone, only grew 0.1% in the first quarter of 2013. In the last quarter of 2012, the German economy witnessed an economic contraction of 0.7%. (Source: “Germany reports sluggish first-quarter growth of 0.1%,” … Read More