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A Singular Viewpoint

A Singular Viewpoint

Global Overview , May 5, 2017

John Hsu 0 74
We continue to be bullish on global markets given certain events materializing. For the US, the major hurdle continues to be the repeal of Obamacare. Now that it is half done, its completion by the Senate has to be quickly followed by the much anticipated tax cuts. At the end of the day it is how secure the GOP will be come the 2018 elections.

US Overview, March 7, 2017

John Hsu 0 140
The statement by Chair Yellen last week confirmed our belief since late last year that the Fed has finally started to normalize interest rates. Yellen’s announcement virtually assures a rate hike later this month.

Even though the language continues to be relatively moderate, advocating a gradual rise in rates to calm the market it should nevertheless be viewed as a ploy. Until such time that the yield curve is normalized, interest rates will be steadily going up.

US Overview, February 7, 2017

John Hsu 0 168

With the radical departure in Fed policy and an entirely new political/economic outlook, I have some additional insights I would like to share with you.

Overview - US December 1, 2016

John Hsu 0 243
The US just went through one of the most contentious presidential elections in recent history. With the surprise win of Donald J. Trump, the nation and thereby the world is geared for radical changes and direction.

Global Overview October 13, 2016

John Hsu 0 243

As we approach the homestretch and start to focus on 2017, global economies will be confronted by numerous challenges and uncertainties. As the world’s largest economy, the US will not only be adjusting expectations and realizations for the next four years based on who will be occupying the White House but also whether the Federal Reserve will finally have the will  to pull the trigger and restart its initial feeble attempt which began almost a year ago to normalize interest rates. Many issues will remain on the table after Election Day. As much as Hillary Clinton appears to be in the lead to win the Presidential elections, recent revelations courtesy of WikiLeaks tell a confusing tale as to which HRC will be running this country. In addition, Wall Street is extremely fearful of Donald Trump winning, especially because of his very vocal opposition to existing treaties on trade and his open complaints about Janet Yellen and the Federal Reserve.

Global Overview July 13, 2016

John Hsu 0 376

The speedy selection of a new leader for the Conservative Party in Britain and her subsequent appointment as Prime Minister has rather quickly restored calm to global financial markets. Markets across the board whether directly or indirectly affected by Brexit were brutally savaged by the British vote. Normalcy has returned as the British political system proved its ability to withstand turmoil.

Global Overview April 14, 2016

John Hsu 0 513

US

After struggling for most of President Obama’s two term presidency, the US economy has found its footing – albeit an anemic one – after such a long struggle. So therefore, in a global context this is truly a case of, “In the land of the blind, the one-eyed man is king.” However, many issues still confront the US economy, especially during this presidential election year. Clearly, Chairperson Yellen has been caught in a bind. With perfect 20/20 hindsight she should have pulled the trigger on normalizing interest rates much earlier in 2015. Nevertheless, there were numerous reasons as to why she did not. Uncertainties about the US economy prevailed until December of last year when she finally pulled the trigger and implemented a strategy to normalize interest rates.  Whether this was too early or too late she now has to publicly scale back the four rate hikes for 2016.

Global Overview January 11, 2016

John Hsu 0 661

“China Drags Down Markets.” This was the lead headline in the Wall Street Journal last Friday, January 8th that said it all. Global markets from the get-go this year were pounded by mostly panic selling. It was compounded by technical issues in the marketplace although fundamentals were largely stable. Given what had happened late last summer in China, everyone was tracking intensely what was going on in the Shanghai market. Those fears quickly broadened to a focus on the yuan, the Chinese currency, and a concern about Beijing’s diminishing foreign currency reserves. However, as we pointed out earlier, these reserves still stand at $3.3 trillion at the end of last year. I think in large part due to the current focus on outflows and the possible pressure of further devaluation of the yuan, the PBOC through our old friend Ma Jun who is currently the chief economist of its Research Bureau, stated that China should fix the yuan to a basket of currencies rather than a single one which is the dollar. Beijing’s quick response suggests that the Chinese are now much more attuned to market sentiment and is reacting correspondingly.

Global Overview October 12, 2015

John Hsu 0 602

Summer has passed and so has the idea that the financial world was stepping off a precipice.

China, one of the main excuses for the doomsday scenario, seems to have stabilized. Actually China is going through a once in a lifetime transition, moving from a 19th/20th century manufacturing economy to a 21st century service/consumer driven one. Current statistics suggest that it is roughly half accomplished. So this is a classic case of the glass being half full or half empty. Manufacturing is slowing thereby giving voice to those who have embraced the thesis that China’s economy is seriously slowing down. Yet if one would bother to review China’s focus on service and consumer, one would likely discover that these sectors are growing double digit.

Current Overview July 14, 2015

John Hsu 0 618

US

The US seems to be on track for a mild economic recovery. At this juncture, a 2+% Real GDP growth seems to be a sustainable number. Furthermore, Chairperson Yellen has repeatedly telegraphed the message that it is likely that the Fed will implement a policy of normalization of interest rates in the near future, subject to data input on an on-going basis. We believe that a hike in interest rates, albeit nominal, is likely in September. We maintain that the Federal Reserve is committed to being ahead of the curve, i.e. take action before inflation manifests itself. Yet the first early signs such as the increase in minimum wage, have already appeared on the horizon. The second issue is perhaps more relevant. The Fed has been under significant criticism from both political parties in Congress. Republicans in general have been critical of the zero interest rate policy implemented by Chairman Bernanke, whereas the Democrats are mindful of banks being too big to fail. The Fed is acutely aware of its critics on Capitol Hill and realizes that it would be providing political fodder for raising interest rates during the Presidential political season. In short, the Federal Reserve has a relatively small window of opportunity to raise rates.

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