Data hitting Wall Street on Wednesday painted an uncomfortable picture for many investors — one that we were just starting to get a glimpse of with the poor September jobs report.
The global market was smacked with a triple threat. First, the Producer Price Index dropped by 0.5% — significantly more than estimated. And then Wal-Mart — America’s largest retailer — slashed its growth outlook and talked about a three-year plan to boost growth that failed to excite anyone. Finally, the Fed’s Beige Book hit, revealing a muted picture of growth for America.
This is NOT an environment the Fed raises rates in.
Gates Capital Management's Excess Cash Flow (ECF) Value Funds have returned 14.5% net over the past 25 years, and in 2021, the fund manager continued to outperform. Due to an "absence of large mistakes" during the year, coupled with an "attractive environment for corporate events," the group's flagship ECF Value Fund, L.P returned 32.7% last Read More
But if the Fed isn’t raising rates and the economy in America is showing signs of slowing, where do you turn next to protect and grow your assets? I learned about a few options on Wednesday…
John Wilkinson, our Master of Ceremonies, kicked off the Total Wealth Symposium on Wednesday afternoon, giving a brief overview of some of the speakers and exhibitors at the conference. With a focus on offshore wealth protection, the goal of the Total Wealth Symposium is not only to answer the questions you have, but also to answer the questions you don’t even realize you should be asking. The speakers will be showing you where to start and what is relevant to you.
The Thin Red Line From China to the Fed
Jeff Opdyke, Editor of Sovereign Investor, was one of our first main speakers, as he discussed China’s devaluation of its currency in August and how it will create a great opportunity in Asia, even though the financial press would have you believe China is struggling economically.
You see, it all leads back to the dollar and the Fed. The U.S. dollar has been on a tear, rallying more than 27% over the past several years, and because the Chinese yuan is pegged to the dollar, the yuan has rallied as well. In fact, it’s up 50% against the Japanese yen, 50% against the Aussie dollar and 40% against the euro. As a result, Chinese goods aren’t as competitive in the global market, which has negatively impacted exports, manufacturing, jobs and China’s GDP.
And China can’t look to the Fed to help crush the dollar, as the Fed is poised to raise rates — though not until later in 2016 — and that will only strengthen the dollar in a global economy where central banks are either lowering or not touching interest rates.
China had only one choice. By devaluing the yuan, China’s goods are better positioned in the world market, setting China up to surprise the world in 2016 with better-than-expected financial results.
With China set to stage an impressive rebound in 2016, Jeff explained his triple-barrel, 10% dollar and dividend solution that offers exposure to China with a focus on dividend growth while taking advantage of a weakening dollar, which he sees coming in the near future. He also provided attendees with two great stock picks to take advantage of China’s future strength. To see those picks and to see all of Jeff’s presentation, you will need to check out our Total Wealth Symposium Defense Kit.
Living the Sovereign Life
Ted Bauman, Editor of Sovereign Confidential, gave an entertaining and somewhat frightening history lesson on Wednesday, as he drew some interesting comparisons between a number of problems which led to the downfall of the Roman Empire and the state of America today. Let’s say there were just too many similarities between then and now to be comfortable living in the U.S. without some kind of Plan B.
Walking subscribers through his “Guide to the Slide,” Ted discussed how economic activity and government are no longer aligned, the collapse of the social contract and how the government no longer represents the will of the people. He also showed his five keys to personal sovereignty as well as a critical list of things that aren’t sovereign.
Ted concluded by discussing important steps to asset protection, such as diversifying assets as well as jurisdictions, creating space between you and your wealth and minimizing your tax obligations. He also discussed key components of what should be a part of your Plan B.
What’s Worked in Global Investing
Eric Roseman, President and CIO of ENR Asset Management, also took the stage on Wednesday to talk about current investment opportunities and European private banking. While FATCA has made it more difficult for Americans to get a foreign bank account, it’s certainly not illegal or impossible. That’s where ENR comes in. The company specializes in helping Americans open private bank accounts in Europe for managed and self-directed clients. ENR’s primary bank relationship is with Votobel Bank in Zurich and Bank Winter and Volartis Bank in Vienna.
Eric went over some highlights of what he currently sees working in the market as well as his outlook. Dividend-paying stocks continue to beat the market. In fact, companies that are consistently raising their dividends are doing even better than companies that are paying a dividend, but not consistently raising their dividend. Buy-and-hold is actually working when investors are focused on strong companies. He also showed a preference for value over growth stocks and small-cap stocks over large-cap stocks.
For the first time since 2008, Eric’s outlook is bearish. Stocks are in a correction or a bear market now. The dollar is currently too strong, which is negatively impacting several markets and sectors. In addition, real estate in major cities are in a bubble.
Value investing will be the key as it has lagged growth recently, while major concerns continue to be the dollar, China and emerging markets.
Erik also listed ENR’s core investment themes as well as the group’s biggest holdings. To see Erik’s entire presentation, check out our Total Wealth Symposium Defense Kit.
More Updates This Afternoon
I’m taking notes as fast as I can and sending back the dispatches to you. I’ll have another update later this evening with tips and tricks from Brad Deflin’s talk about threats to your privacy as well as Chris Gaffney’s talk on navigating risks in an uncertain world with some interesting investment insights.
But you don’t have to miss a minute of the presentations. Check out the details for our Total Wealth Symposium Defense Kit.
Regards from your on-the-ground reporter,
Sr. Managing Editor, Sovereign Investor Daily
The post We’re Headed for a Crash appeared first on The Sovereign Investor.