china

Stocks! China! Trade Deal!

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Stocks! China! Trade Deal! 1

The Trump presidency has been nothing if unpredictable. The President seems to wake up with new tweets on his mind every day, and the markets love overreacting to every one. The result is a stunning whip shaw effect of large market moves up and down, often during the same day. This morning, U.S. Trade representatives said that the new tariffs Trump announced in a tweet on August 1 would be delayed. Some tariffs will be delayed until September 1 and others until December. Does that mean that progress is being made on a trade deal? Only the President knows, although he doesn’t really know either. Depending on how talk show hosts talk over the next few weeks, and what he advisors say, he may or may not think he is getting a good deal. Or getting credit for a good deal. Or maybe just get bored. Long-Term Diversified Portfolio Every financial planner eventually gets tired of beating this drum, but the answer is always the same. A long-term, well-balanced, risk adjusted, annually rebalanced portfolio is the solution to the dramatic, unpredictable moves of the market. Sooner or later, this market will roll over. Although, the tons of analysts “predicting” it …

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China Is Officially a Currency Manipulator

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China Is Officially a Currency Manipulator 2

China has been a currency manipulator for years. Everyone knows it. China knows it. The U.S. knows it. Every economist in the world knows it. China has an enormous trade surplus with the world. Typically, when this happens, the value of that currency rises making its exports more expensive to other countries. This, in turn eventually reduces the amount of imports a country makes, thereby reducing the overall trade deficit. China, which requires its citizens to hold their savings in state run banks, uses the large amounts of currency it generates sending exports around the world to ensure that the value of the Yaun never gets above a certain amount. In turn, this both keeps its exports cheap, and prevents any closing of the trade gap between its trading partners. None of this is secret, or remotely new information Trump Calls Out China Currency Actions What is new, is that usually no one says it out loud, and no one ever actually makes it official by labeling China a currency manipulator. So, what does it mean now that China has been officially labeled? Nothing. You see, since China has been doing this forever, and the other countries have known about …

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China and the Stock Market

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China! Aggghhhh! Everyone panic. (And China panic again…) The Chinese stock marketing is crashing, and it’s making everyone nervous. As always, long-term investors with diversified portfolios need do nothing other than sit back and watch. I, for one, like following along the headlines. You know, the ones that swing violently from doom, to fine, and back again. What Is Happening In China? Once upon a time, China was a communist country without much of an economy to speak of. Then, the government decided it wanted to be a big world economy, and in China, what the government wants, the government gets. The Chinese government devoted billions and billions of dollars to building up new cities filled with factories, and then spent even more money subsidizing those endeavors until, everything was made in China. With a new power economy, China also decided to get the other “regular” economy things like banks, lending and even a stock market. Fast forward a few years, and the Chinese stock market has been roaring along. Then, earlier this summer, the Chinese stock market started to drop. The government stepped in and put a stop to it. Unfortunately, real stock markets eventually end up doing what they want …

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