🌍 Economic reports are here

and China's changing

Good morning investors! This is going to be a very busy week with major economic reports and earnings from big names like Apple, Meta, Shell, Chevron, and Microsoft expected. Also, Bitcoin might show some movement as it is once again back to $42,000.

Today we cover:

  • Economic data to keep an eye on. 👁

  • China is making major changes. 🇨🇳 

  • Investing in global ETFs. 🌍

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📊 Economy and News 

A lot to look forward to this week

This week will make it clearer if the Fed will cut interest rates in March. The market is confused, some see a rate cut in March and some expect the Fed to increase the rate.

Investors need to keep an eye on several economic reports and happenings:

  • On Tuesday, we'll get a chance to look at December's Job Openings and Labor Turnover Survey that highlights the demand and supply imbalances in the labor market. Economists expect to see job openings falling to 8.71 million.

  • Employment Cost Index for the fourth quarter will come out on Wednesday. A rise of 1% is expected in this quarter.

  • On the same day, the Fed will announce its latest interest-rate decision. The general consensus is that the Fed will hold rates steady.

  • Next, the January jobs report will highlight the job market. The unemployment rate has remained at 3.7% and is expected to jump to 3.8% with 170,000 new jobs in January. These low figures indicate the labor market is cooling off at the desired pace.

Global hits:

  • Singapore’s central bank leaves policy unchanged in the first quarterly meeting of 2024.

  • Sony is making a bold bet on an African gaming startup to boost PlayStation’s reach in the continent.

  • Oil prices higher after Iran-linked drone strikes kill three U.S. troops, Biden vows retaliation

Big trouble for big pharma: Pharma companies like Bristol Myers Squibb, Merck and Johnson & Johnson face so-called patent cliffs that will put tens of billions of dollars in sales at risk between now and 2030.

📈 Stocks

S&P 500 4,890.97 (-0.065%)
DJIA 38,109.43 (+0.16%)
NASDAQ 17,421.01 (-0.55%)
BRENT CRUDE 83.50 (+0.16%)
* Prices as of Jan 29th, 12:20 AM UTC

China making major changes to safeguard its markets

China has been going downhill since the pandemic and now it has limited short-selling to stem a protracted $6 trillion-dollar stock market rout that has been going on since 2021.

What does it mean? Effective today, the curbs impact shares held by company employees or strategic investors. These cannot be traded in the stock market for now, but can still be lent to others for short-selling.

This isn’t the first time that the country has implemented such a measure. It made a similar move in October yet couldn’t curtail the sell off.

Surprising changes: The country recently sent shock waves when regulators announced the decision to evaluate the performance of the heads of state-owned companies based on their stock market value.

Moreover, the country announced plans to further open its $64 trillion financial industry to international investors, followed by The People’s Bank of China’s governor, Pan Gongsheng, announcing the shocking decision to slash the amount of cash banks are required to hold as reserves, a decision that would result in the addition of $141 billion in long-term liquidity.

More coming? It has been rumored that Chinese authorities are considering ordering state-owned enterprises to use money held in offshore accounts to buy shares worth as much as $282 billion.

In addition, the country has plans to merge 3 bad debt asset managers (China Cinda Asset Management, China Orient Asset Management and China Great Wall Asset Management) with its largest sovereign wealth fund.

But what’s good? China’s luxury market is bouncing back with new areas of opportunity.

Evergrande’s grand trouble: Evergrande, a symbol of China’s property crisis and the world’s most indebted property developer, is heading to liquidation.

The wind-up order comes after the company and its overseas creditors failed to reach an agreement on how to restructure the company’s massive debt.

Shares of China Evergrande were briefly halted after plunging over 20% in early trading.

Reminder: India is now the world's forth largest stock market after moving higher than Hong Kong.

If you could choose one market, where would you invest?

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💵 Personal Finance

Foreign ETFs and getting exposure to non US markets

Exchange-traded funds (ETFs) are a great way to diversify and get involved in foreign markets. There are several ways to invest in foreign ETFs:

  • You can choose a country specific ETF to get exposure to companies operating in a specific country. For example, EWG, the iShares MSCI Germany Index ETF, tracks the MSCI Germany Index. You will have to open an account with an online broker that offers these services.

  • You can try a broad foreign market ETF that consists of companies from different markets. For example, a BRIC investment will include securities deriving from Brazil, Russia, India, or China. Examples include BKF iShares MSCI BRIC Index ETF.

  • Currency ETFs track foreign currencies and are known to be risky. The best way to reduce the risk is to own a large share in your currency or a currency that's less likely to fall.

  • You can get access to emerging markets with an Emerging Market ETF. Examples include the Global X MSCI Colombia ETF (GXG) and the iShares Core MSCI Emerging Markets ETF (IEMG).

  • International bond ETFs also exist. Known for offering a regular flow of income, they can be safe and an easy way to diversify.

  • This might come as a surprise, but commodity ETFs also exist and they greatly vary in prices. You can invest in coal ETFs, solar energy ETFs, and more. However, understanding commodity ETFs can be a little tricky.

You can own foreign stocks even through US ETFs as a large number of them, including the Vanguard Total World Stock ETF own a mix of American and foreign stocks. Some such as the iShares MSCI ACWI ex U.S. ETF only own foreign stocks. However, returns might not always be phenomenal.

The former has had an annualized return of 8.07%, slightly lower than its benchmark of 8.17%, whereas the latter has had annualized return of 3.70%.

You will even find country-specific ETFs in the US, such as the WisdomTree Japan Hedged Equity Fund (DXJ) that concentrates on the Japanese market with an ROI of 9.97% over the past ten years.

Check this video for more:

💰 Be a Better Investor

"The longer you're not taking action the more money you're losing."

Carrie Wilkerson

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