Has the World Economy
Slowed Down?
In
early August, China’s manufacturing PMI reduced its growth pace to 47.8 in July
while U.S. ISM manufacturing PMI also slowed down to 52.7 reading. Both largest
economy in the world have reported the growth to be lower than previous month.
The
Greek crisis has not been resolved since the economic damage is so severe. Even
a new bailout will probably not be able to save the country from eventually leaving
European community. In Asia, Japan’s central bank has promised to remain
monetary expansion at JPY80 trillion per year. Unfortunately, the market
investors have yet seen the Nikkei raising above 21,000 levels and Yen stops weakening
at beyond 124.00 levels against greenback.
Most
importantly, China is the centre of limelight after the Shanghai stocks fell
recently. The Chinese index has lost its momentum and failed to stand above
4000 benchmarks from recent recovery. Most Asia stock indexes have slid
recently following the bears emerging across the equity boards!
Towards
the end of 2015, we have another 4 months to go and reckon it will be a tough
time to manage the trend. Demand in most commodities are rather low for past 2 months
due to rising Dollar. However, the El Nino impact that is now pouring herculean
rain over many regions in Equatorial belt have begun to short-squeeze the
commodity prices.
In
geographical study, El Nino weather impact is caused by a temperature rise in
southern Pacific Oceans and blowing northwards as hot air rises. Cold wind from
northern hemisphere shifts downwards and collides with the hot wind thus
causing storm showering in tropical countries. From past records, all
agriculture products will face shortage from this weather disaster and begin to
push up the shortage prices in the post weather crisis for estimate 6 months.
Hence,
we foresee the consumer prices will rise towards Q1 2016 regardless FED decides
in credit tightening. Unfortunately, the world will continue to slowdown in
demand as world’s major economies tune down their growth. Stock prices will
move into sideways swings while fund might move into bonds for fixed income
potential.
Hence,
we favour stay long in Gold and Silver for hedging in this coming stagflation. Disregard
Crude for time being as global investors always prefer to lock fund into
precious metal as hedge haven than the bulk drums of oil. As the major world
currencies become fiat monies, only precious metals will be able to contain the
real values and bring you wealth. At least, they safeguard your savings.
~
DAR Wong is a registered Fund Manager in Singapore with 26 years of trading
experiences. The expression is solely his own. He can be reached at dar@pwforex.com
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