Don’t Put Your Funds in Risk-Based Assets, Analysts Warn
As the stock market continues plummeting due to various factors, many investors are enticed to invest their capital more since they can buy more stocks at a cheaper rate. However, before you actually pour in your hard earned savings, you might want to think twice. An analyst warns the investors that now isn’t a good time to invest your capital and enter the market.
A Goldilocks Economy
UMB Bank Chief Investment Officer K.C. Mathews said that America’s economy is what you call a “Goldilocks economy” where we experience low-interest rates, low inflations, as well as stellar corporate earnings. America is currently enjoying its booming economy with the unemployment rate reaching down to 3.8%, one of the historically low rates in history, but some financial experts are worried this trend might not last.
Matthews revealed the culprit behind his doubt was the looming trade war. He added that as an investor, he would be very cautious about putting his capital in risk-based assets. While he’s still comfortable with the current performance of risk assets, he warns the investor’s capital might suffer from a heavy blow of “plowing market” unless the trade issues get resolved. Mathews added the market has been experiencing volatile movement and performance ever since President Trump announced his plan to impose a tariff on steel and aluminum last March.
A Losing Streak
Last Thursday, the Dow Jones Industrial had suffered a losing streak for eight consecutive days before it turned positive a day after. Ron Insana, CNBC’s contributor commented on how our current market’s performance is rotating, struggling.
It’s obvious that our market is greatly affected by Trump’s new policies. Furthermore, the concentration of FANG Stocks gains, as well as how the small caps continue to outperform large caps contribute to the market’s volatility. Add the heated tensions of the upcoming midterm elections, as well as the Fed Interest’s impending increased rates, and the new market still remains to be an uncertain place to enter or invest with.
Mathews added he believed every world leader will cool down while negotiating for a trade agreement. While the world leaders may have differing opinions, he believes they won’t jeopardize the economic growth with their policies. Therefore, the economy’s basic foundation like its growth, decent corporate earnings, and long risk-based assets remain intact.
The Effects of Trade Wars
Last March 2018, President Trump surprised the international community when he announced his Administration’s plan to impose tariffs on metal imports like aluminum and steel. His announcement ignited the tensions in the trade market as giant countries like the European Union, Japan, China, and even the United Kingdom warned the President of retaliation on U.S. brands should he implement his plans. However, the President remained firm in his decision to impose tariffs and he even welcomed the idea of trade wars.
While Trump’s latest action was welcomed by US steel companies a few months ago, they claimed they’ve changed their views about it recently. This was because Keg Company recently announced their layoffs after the imposed metal tariff. Paul Czahor, the CEO of Keg revealed how their production cost had increased up to 4% since the metal prices have gone up to 35%. While their profit didn’t lessen their cost any more.
This forced Czahor to relinquish 10 employees from their original 30-strong manpower. He noted how their recent layoff contradicted Trump’s promise of opening up more job opportunities for the nation. However, he still hopes that this layoff is only temporary and that they can still fix this problem later.
More in Pocket Change
Another ‘surprising’ Exit for Snapchat Executive as Stock Plummets to Single Digits
Snapchat’s series of unfortunate events in the stock market continues despite the company’s numerous efforts to try and diffuse the situation....October 16, 2018
The Benefits That AI Is Bringing to the Business and Economic Spectrum Today
Artificial Intelligence is slowly but surely becoming part and parcel of our daily life. As a matter of fact, this technology...October 16, 2018
How to Protect Your Long-term Investments From Uncertainties and a Volatile Stock Market
Are you wary of the continuous declining performance in the stock market? Do you see your favorite companies’ shares decreasing as...October 16, 2018
Toyota Recalls a Whopping 2.4 Million Hybrid Cars Worldwide Due to Stalling Driving Problems
The giant Japanese automaker Toyota recalled an astounding 2.4 million Prius hybrid cars due to stalling problems while driving. The Recall...October 16, 2018
These Small Money Leaks Drain Your Finances Without You Realizing It
Have you ever wondered why your money seems to disappear like a bubble the moment you receive your salary? No matter...October 16, 2018
Experts Reveal How Meditation Can Help Improve Your Career
Nowadays, more and more American employees deal with work stress than ever before. Oftentimes, they overwork themselves to the point of...October 16, 2018
Ford Records a Massive 43% Decline in Sales in the Chinese Market
It’s not been a great year for Ford in the international scene, and things seem to be going from bad to...October 16, 2018
Louis Vuitton Hails as the Most Valuable Luxurious Brand In the Fashion World
According to Interbrand’s annual Global Brand Chart, Louis Vuitton hails as the world’s most valuable luxurious fashion brand. The said ranking...October 16, 2018
Tesla’s Shares Continue to Stumble as Executives Quit
As if Tesla’s CEO Elon Musk’s admission in an explosive interview in NYT about him taking pills to sleep. This, after...October 15, 2018