GTM-TNHWN3R Verification: 8022f68be7f2a759

As global growth slows, why are investors still so bullish? : Aura Solution Company Limited

Key highlights

The most serious risk to growth is a collapse in trade negotiations between the United States and China.

The Federal Reserve says it is "patient," but it's also data-driven and will likely act when warranted.

The United States has experienced stronger-than-expected growth and positive corporate earnings


I had the privilege of attending the International Monetary Fund's spring meeting in Washington, D.C., last month. The key takeaway from the conference of leading global economists and monetary policy experts? Global growth is clearly slowing.


Having estimated 3.6% growth for 2018, the IMF in January forecast 3.5% growth for 2019. But at the meeting, it cut that projection to 3.3%—the lowest rate since the global financial crisis—amid signs that higher tariffs are restricting trade and that there is a more challenging outlook for most developed economies.


It makes me wonder: Why do investors remain so bullish? And how should they position their portfolios? Although the IMF expects global economic growth to pick up during the second half of the year and reach 3.6% in 2020, such growth is by no means a certainty, since several key risks exist.

Trade negotiation risks

The most serious risk is a collapse in trade negotiations between the United States and China. Many trade analysts believe that in two to three months we'll see an announcement that a deal has been reached. But if talks stall, the result would be very bad for China and the markets that depend on it for their commodities exports.


The United States would also suffer. A breakdown in talks would harm agriculture and other economic sectors, while distracting from negotiations with Germany over autos and broader U.S.-Canada-Mexico trade talks.


Another potential risk is that the U.S. Federal Reserve will go back to raising interest rates. At the moment, the Fed has paused, having announced in March that it no longer planned any increases for 2019. It reiterated a "patient" approach this month. The signals we're getting are that rates won't go up until mid- to late 2020. But the Fed is data-driven, and should the data change, it might act sooner.


An earlier-than-expected rate hike would matter a lot. It would slow economic growth in the United States, which, in turn, would affect the rest of the world, given the United States' status as the world's largest economy.


Other potential risks include details of the Brexit finalization, which could be particularly harmful to the United Kingdom and, to a lesser extent, the European Union. Another concern is the growing debt burden of governments throughout the world, in particular, the United States. With a debt-to-GDP ratio approaching 100%, the United States owes about as much as it produces in a year.


Potential silver linings

So why do investors remain so bullish?


Part of the explanation lies in the generally stronger-than-expected growth and positive corporate earnings in the United States, as well as the bottoming out of an economic slowdown in China. But there are several other potential silver linings, including the potential for a U.S.-China trade deal, which could boost markets. Even if it isn't as comprehensive as market participants may anticipate, a completed deal offers important symbolic value. Also, the Fed's pause on rate hikes will likely continue. (Some market watchers even anticipate a rate cut this year, given recently low U.S. inflation.)


Of course, the markets are affected by multiple inputs. These are just a few of the factors that have led to investors' mild bullishness in 2019.


Investors with long-term goals should weigh views on policy uncertainty and market volatility only when deciding on their asset mix, including their ability to tolerate short-term losses. What's most important is that investors who remain disciplined, diversified, and patient are more likely to be rewarded with fair inflation-adjusted returns over the long term.


In the end, short-term developments are less important to investors' success than the big-picture trends that will shape markets in the years ahead.


For more information : https://www.aurasolutioncompanylimited.com

About us : https://www.aurasolutioncompanylimited.com/aboutus

Our Services :https://www.aurasolutioncompanylimited.com/ourservices

Latest News : https://www.aurasolutioncompanylimited.com/press

Contact us : https://www.aurasolutioncompanylimited.com/contact-us

Aurapedia

Desktop : https://www.aurapedia.org/aura-solution-wikipedia

Mobile : https://www.aurapedia.org/aura-mobile-aurapedia-wikipedia


Follow us on

Twitter : https://twitter.com/aurasolutionltd

Facebook : https://www.facebook.com/aurasolutionltd/

Instagram: https://www.instagram.com/aurasolutionltd/


Choose your Country or Region

United States of America

Hany Saad

Vice President

Aura Solution Company Limited

E : hany@aurasolutioncompanylimited.com

https://www.aurasolutioncompanylimited.com

P : +1 267 6960 444

Aurapedia Desktop : https://www.aurapedia.org/hany-saad-wikipedia

Aurapedia Mobile : https://www.aurapedia.org/hany-saad-mobile-wikipedia

________________________________________

Africa and Middle East

Kaan Eroz

Managing Director

Aura Solution Company Limited

E : kaan@aurasolutioncompanylimited.com

https://www.aurasolutioncompanylimited.com/mea

P : +90 532 781 00 86

Aurapedia Desktop :https://www.aurapedia.org/kaan-eroz-wikipedia

Aurapedia Mobile :https://www.aurapedia.org/kaan-eroz-mobile-view

________________________________________

Asia Pacific

Mark Brewer

Managing Director

Aura Solution Company Limited

E : brewer@aurasolutioncompanylimited.com

P : +66 993034 369

________________________________________

Europe

Patrick Belkidar

Managing Director

Aura Solution Company Limited

E : patrick@aurasolutioncompanylimited.com

https://www.aurasolutioncompanylimited.com/europe

P : +33 6 58 90 27 58

________________________________________

Latin America and the Caribbean

Joseph Aidamouny

Managing Director

Aura Solution Company Limited

E : AIDAMOUNY@aurasolutioncompanylimited.com

https://www.aurasolutioncompanylimited.com/latam

P : +961 70 322 305

Aurapedia Desktop : https://www.aurapedia.org/joseph-aidamouny-wikipedia

Aurapedia Mobile : https://www.aurapedia.org/joseph-aidamouny-wikipedia-mobile

________________________________________

India

Vinod Prasad

Managing Director

Aura Solution Company Limited

E : vinod@aurasolutioncompanylimited.com

W: www.aurasolutioncompanylimited.com/india

P : +91 98608 54929

Aurapedia Desktop : https://www.aurapedia.org/vinod-prasad

Aurapedia Mobile : https://www.aurapedia.org/vinod-prasad-mobile-version




12 views
Aura Solution Logo
  • Aura Facebook
  • Aura twitter
  • Aura Youtube
  • Aura instagram
Aura Solution
Aura Solution
Aura Solution
Aura Solution