Penn Wealth Publishing

2018.12.16 Penn Wealth Report Vol 6 Issue 06

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16 Dec 2018 Penn Wealth Report volume 6 issue 06 7 Penn Wealth Report Copyright 2018. All Rights Reserved. investment intelligence come, however, with a US administration demanding an end to this illegal practice. e dirty little truth is that China's econ- omy is, indeed, slowing. More precisely, it's growth rate is slowing. We believe both China and Europe will present a drag for the global economy next year. row concerns over Iran and North Korea into the mix (they are who they are, and only regime change will affect that fact), and we can expect a choppy year. Two-thirds of the companies may be overseas, but we would still heavily overweight domestic stocks and bonds. What is the emerging markets outlook for the year ahead? Investing in emerging markets can be a rush. Wild swings and near-constant volatility are the norm for this "Wild West" corner of the investment world. After falling over 14% as of the first of December—versus a flat US market, will 2019 be a breakout year for EMs? e biggest challenge with lumping the emerging markets together is the dispar- ity of GDP growth we see between the EM countries going forward. e BRIC (Brazil, Russia, India, and China) coun- tries make up the lion's share of most EM investments, but we are down on two of those regions: Russia and China. Russia remains overwhelmingly-depen- dent on oil revenues for its GDP, and we don't see an unusual spike up in prices, despite the threatened OPEC/Russian cuts. China, with its $12 trillion economy, has a host of challenges. One of the fall- outs of the ongoing trade battle has been the movement of companies out of China and into other emerging markets such as Vietnam and India. e latter poses a huge threat to China, as it is basically in the same position that China was a few decades ago. India has a population of 1.3 billion and a GDP of just $2.5 trillion, yet nothing is stopping it from becoming the "next China." In addition to India, we see great potential in some of the former Eastern Bloc nations, Poland in particular. ese countries have embraced economic free- dom and will end up posing a real threat to their arrogant European neighbors to the west. Finally, we also see some promise among the Latin American nations which have shunned their long dalliance with communism and socialism in favor of the free market. Argentina and post-Lula Brazil are our favorite picks. Sadly, the economic disaster that is Mexico is only going to descend further into the abyss after that country elected a full-throated socialist to be its new president. "AMLO" may have tempered his words to get elected, but he is already showing his col- ors as a Chavez wannabe. To get an idea of the volatility that comes with investing in emerging mar- kets, take a look at the Callan Periodic Table of Investment Returns on the e Penn Conservative Growth Portfolio is designed for clients with a Risk Level between 51 and 89. For all Penn Tactical Asset Allocations, click here and sign in.

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