With growing concerns over the price of oil, the slowing of the Chinese economy, and the Dow Jones Industrial sinking further, investors might be bracing themselves for a tough winter. According to global chief investment strategist for BlackRock Inc., Russ Koesterich, "What people are afraid of is this isn't investors overreacting, but it reflects a fundamental deterioration in growth." Growth is essential and as we see in the Chinese economy, growth seems to be slowing.
Now this news does not indicate that investors need to sell off everything rather this is part of a "re-valuation in the market." Some things could happen to ease tensions, where banks could step in, consumers could cut back saving on energy costs and spend more elsewhere, and growth in China could always pick up.
There's optimism among big companies such as JPMorgan Chase and Wells Fargo Funds Management LLC that the economy will improve. According to various employees at these companies, "The US economy looks pretty good at this point, and that credit quality across card and commercial lending businesses is as good as its ever been." A solid earnings season could get things back on track and we'd see gradual improvement in the markets.
Elsewhere, debt investors in the US are paying exceedingly high costs to protect against defaulting. China has used a significant amount of its foreign exchange reserves last month to stop the yuan from plummeting. The Fed has raised interest rates for the first time in almost a decade. While things seem dire, there can always be a revival, as Brian Jacobson of Wells Fargo Funds Management LLC commented, "We just really need to get through this drop of sentiment, and get back to fundamentals."
Link: http://www.bloomberg.com/news/articles/2016-01-15/retail-sales-in-u-s-decrease-to-end-weakest-year-since-2009
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