The Oasis of the Seas. It’s a behemoth that Royal Caribbean sails — topping out at 225,282 gross tons, and measuring 1,186.5 feet long. The ship docks less than an hour from my house, and since our family loves to cruise, we’re really hoping to get on board sometime in the next year or so.
But even with all that weight, and the head of steam a ship like that can build up, its giant anchor can bring it to a halt. Stop it dead in its tracks. The question for investors like us, though, is whether the world’s “Anchor Economies” are enough to do the same to the U.S.?
Look, our domestic energy industry is growing by leaps and bounds. I’ve been telling you about that for several quarters now, and helping you profit from it. Manufacturing is picking up here as well, and other industries like aerospace and health care are faring well, too.
|Manufacturing sectors, such as aerospace, are doing well.|
But Europe? It’s stuck in the mud! Just in the past few days, we’ve learned that Germany’s Ifo Institute business confidence index sank to 104.7 in September. That was worse than expected, and the lowest level since April 2013. Euro-zone unemployment is hovering at a near-record 11.5 percent, inflation is getting closer and closer to the 0 percent mark, and growth ground to a halt in the second quarter.
What about China, the former juggernaut of the global economy? Its real estate market is cooling, its factories are slowing, and its economy is on pace to expand by less than the government’s 7.5 percent target. Chinese industrial production just rose at its weakest pace since the global economic crisis in 2008, while retail sales growth has plunged from almost 18 percent a couple years ago to just 12 percent now.
Japan? Nothing good going on there! Its economy just shrank at a whopping 7.1 percent annualized rate. That’s the worst contraction since the first quarter of 2009.
In other words, you’re talking about anchor … after anchor … after anchor! The U.S. economy — like the Oasis — has kept on sailing regardless, driven by the stronger domestically focused industries I’ve been highlighting.
But the market action earlier this week suggests we may be starting to get dragged off course. Many economically sensitive, globally focused stocks have started to weaken behind the scenes, and even the broad U.S. averages stumbled.
This bears watching for sure. You can bet I will be doing exactly that, as well as updating you right here in Money and Markets on this unfolding trend!
In the meantime, let me know what you’re doing with YOUR portfolio. Are you selling foreign stocks and buying domestic ones? Have you abandoned Chinese stocks, or European stocks? Or do you think there’s value there? What about the domestic economy — can it find calm seas or is it going to get dragged under the waves? Add your observations at the Money and Markets website!
Until next time,