We headed into 2019 with little hope that market downturns across the globe would change direction and go back up after a correction.
But if you had a chance to look into the markets this week, you’d have seen that they were headed up.
And with US–China trade negotiations progressing, you may be forgiven for thinking that markets will continue to rally. That we may even see some relief and 2019 might not be as volatile or ‘bad’ was also predicted towards the end of 2018.
However, while markets may very well rally in 2019, global growth is slowing down. And according to Wall St, it’s not a matter of ‘if’ but ‘when’ the global economy will suffer a more severe downturn.
So what are the issues facing the global economy? Well according to Business Insider, economies around the world are slowing down, political uncertainty is rampant and central banks are unwinding accommodative monetary policies.
All these factors could cause volatility in markets across the globe.
As an investor, how could you potentially protect your wealth from the effects of a global economic downturn?
If you want to protect your family wealth, you need to know why this financial expert is predicting economic collapse. Find out more here.
One avenue is defensive assets.
As Goldman Sachs strategists led by David Kostin told clients in a letter on Monday:
‘Strategically, we recommend investors increase portfolio defensiveness,’
‘Cash allocations are at or near the bottom of their 30-year historical distribution for many investors.’
So what are defensive assets?
They are usually cash or fixed interest investments that are considered to be lower risk and less volatile than growth assets. Essentially, they’re a more stable investment during times of market volatility.
The World Bank has also released its forecast for the year, and they predict that global growth will be cut. Much like we’ve mentioned above, the World Bank also cites trade disputes and messy market movements as a reason for their dour forecast.
The bank stated:
‘“The outlook for the global economy has darkened. Global financing conditions have tightened, industrial production has moderated, trade tensions have intensified, and some large emerging market and developing economies have experienced significant financial market stress,” the bank said. “Faced with these headwinds, the recovery in emerging market and developing economies has lost momentum.”’
Furthermore, former US Treasury Secretary Larry Summers has said that the world should prepare for their largest economy, the US, to head into a recession.
And on Tuesday, World Bank chief executive Kristalina Georgieva told reporters through a conference call that ‘We are facing a more difficult period for the global economy and the volatility in the financial markets certainly gave us that signal recently’.
So what are the global growth prospects forecasted by the World Bank? Well, it is expected that growth will fall from 3% in 2018 to 2.9%. This is a reduction of 0.1 percentage points from the forecast it predicted in June 2018.
They’ve also lowered their forecast for emerging markets by 0.5% to 4.2%.
With forecasts looking bleak and markets experiencing volatility for the past few months, investors need to be weary.
Controversial economist and editor, Harry Dent has forecasted a recession in the US and consequently Australia in his newsletter Boom & Bust. If you want to find out how Harry believes you could potentially protect your wealth in these current global and market conditions, then check out his e-letter here.
This week in Markets & Money
In Monday’s Markets & Money, Selva looks at property markets around the globe. In Canada, the property market was booming and prices soared, however they are starting to see a cool down. As is New York, Hong Kong, London, as well as back home here in Melbourne and Sydney. This us leading to tighter lending credits and causing a slowdown in the global economy. To find out more, go here.
In Tuesday’s Markets & Money, Selva discusses how the Fed might hold off on interest rate rises due to the increase in employment in December. However, are they just playing a game of chicken? Are the markets and rates heading for the edge of a cliff? Selva suggests it might be time to cut risks and load up on cash. To find out more, go here.
On Wednesday, Selva wrote about the wave of legalisation that marijuana is currently experiencing. While the mentality surrounding cannabis is changing, countries are starting to legalise medicinal marijuana, with Canada and Uruguay having already legalised its recreational use. And as Selva explains, that means that cannabis investors may just have a big year in 2019 too. To find out more, click here.
In Thursday’s Markets & Money, Selva explains why confidence can be deceiving. Authorities trying to keep economic confidence up could be a key indicator that all is not well. But confidence needs to be up, otherwise panic could ensue. To find out more on this topic, go here.
In Friday’s Markets & Money, Selva looks at the slowing down of the Euro economies. As Selva explains, the ECB flooded the economy with money and lowered interest rates. And in December, it ended their QE program. To find out more about this, go here.
Editor, Markets & Money Weekend
Publisher’s Pick: Don’t Buy a Single Pot Stock until You’ve Read This Book! Sam Volkering has just released an exclusive investing resource called ‘The Black Book of Cannabis’. Inside, you’ll be taken deep under the covers of the most controversial, misunderstood and lucrative investing opportunity of our lifetimes. Download you copy today and learn how to potentially turn a single $5,000 investment into $24,750 within the next 12 months. Click here to get your copy.