The Wealth Minute - Morning Notes - May 2, 2022
David Crotin, MASc, CIM, QAFP
Working with business owners, executives and professionals to provide tax, investment and financial planning strategies to meet their needs and goals.
China’s Economy Faces Slow Growth, Threatens Global Growth.?According to?The Wallstreet Journal, conditions in China fueled by Covid lockdowns continue to slow down its’ economy, with Economists toying with the word “recession” to describe it. A traditionally defined recession means two straight quarters of economic contraction, which remains unlikely as the country has the ability to increase government spending to ensure stronger growth relative to the West. Underlying conditions, however, with millions of new graduates struggling to find employment, imports, and business confidence plunging, the Chinese are becoming keener on saving, all have the attributes of what “feels” more akin to a recession – something China actually hasn’t experienced in decades. The issues are further exacerbated by the fallout of the war in Ukraine, and any sustained slowdown in China will be felt globally. The IMF projects China to account for a quarter of global economic growth through 2026.
Uneven U.S. Earnings Season Struggles to Provide Fuel for Markets.??According to?Reuters, a better than expected earnings season is being dampened by mixed results from U.S. mega-cap companies, and so far struggling to provide any fuel to stock performance ahead of the Wednesday’s Fed meeting. The S&P 500 ended declined for a fourth straight week which sees the benchmark now down ~13.3% in the first four months of the year. Despite more than 80% of companies so far reporting earnings above analyst estimates, concerns over inflation, uncertainty around monetary policy, geopolitics, and lockdowns in China continue to be the predominant themes and earnings have not yet been strong enough to overcome these themes.
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