Has The New Cold War Started? Foreign Investors in China Take Note and Get Out.

Independent Insight Provider

Stewart Paterson

Thematic (Sector/Industry)

<p>Equity, bond and currency markets have started the process of price discovery in the new era. The new era is defined by the end of two things: super supportive, unorthodox monetary policy and an economic cold war between the United States and China. The former is likely to highlight the foolishness of the single European currency; the degree to which easy credit has boosted corporate profits and the extent of financial leverage in asset markets. The later will likely highlight the degree to which companies have benefited from a globalized market in labour to augment profitability and the extent to which Chinese mercantilism has surpressed inflation in the developed world.  The process may well prove very expensive for investors who are long financial assets. </p>

Equity, bond and currency markets have started the process of price discovery in the new era. The new era is defined by the end of two things: super supportive, unorthodox monetary policy and an economic cold war between the United States and China. The former is likely to highlight the foolishness of the single European currency; the degree to which easy credit has boosted corporate profits and the extent of financial leverage in asset markets. The later will likely highlight the degree to which companies have benefited from a globalized market in labour to augment profitability and the extent to which Chinese mercantilism has surpressed inflation in the developed world.  The process may well prove very expensive for investors who are long financial assets. 

Price Discovery in the New Era Begins and It Is Not Looking Pretty.