Why Is Every Asset Down In 2018 (& 3 Questions For 2019)

Zero Hedge | 12/9/2018 | Staff
Les7799 (Posted by) Level 3
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In his latest Strategy Monthly, Louis-Vincent Gave writes...

Investors will be happy to bid farewell to 2018, a miserable year in which all assets underperformed US dollar cash.

Gave - Year - Questions

But, Gave notes that for next year, three questions are critical:

1) Will the US-dollar liquidity squeeze ease?

Slow-motion - Unraveling - Chimerica - Synergy - US

3) Are we witnessing the slow-motion unraveling of the “Chimerica” synergy between the US and China?

And what they imply is critical:

Does - Oil - Chain - Reaction - Fed

Does oil start a chain reaction leading to an easier Fed?

Despite record-high tax receipts, the US budget deficit once again expanded in 2018. This is unprecedented. We have never seen consecutive deficit expansions outside of a recession.

US - Government

So what happens next? Will the US government:

3) continue to expand deficits?

Money - Mix - Era

And if so, then will easy fiscal/easy money mix end the deflationary era?

This would have massive consequences for portfolio construction - long bonds did terribly, and equity portfolios were best hedged by gold.

Option - End - Chimerica

Option 3: The End Of "Chimerica"

This year's single most-important event has been the rise in China-US tensions. Are these tensions:

Consequence - Fact - Trump - Advisors - China

2. The direct consequence of the fact that so many Trump advisors see China as a long-term threat to the US and want China cut down to size through an economic cold war?

China remains highly...
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