An Uncertain U.S. Market Has Us Looking East
Alex Moschina|October 5, 2024
Markets bucked the trend in September, putting in a positive return during a month that has a history of turning sour for stocks.
Now October is off to an odd start.
Markets seem unsure what to make of Tuesday’s VP debate and yesterday’s blockbuster jobs report.
We already riffed on the debate. But the latest numbers from the Bureau of Labor Statistics deserve some attention.
Economists were expecting new payrolls in the ballpark of 150,000. So, it was a big surprise to see the labor market actually added 254,000 jobs in September.
That’s quite a jump.
And so, on Friday, Wall Street reckoned with the notion that the jobs market – and the economy as a whole – may be stronger than previously thought.
The question now is… will that idea have an impact on the Fed’s plan to continue lowering rates over the months ahead?
Time will tell.
But rather than speculate about what’s next for the U.S. (a dangerous pastime), this week we’ve opted to look East…
Chinese Stocks in Overdrive
Shah kicked things off on Monday with comments on the recent rise of the iShares China Large-Cap ETF (FXI).
Chinese stocks rose by double-digits after the powers-that-be nudged institutions to support the market.
Year-to-date, the FXI has risen more than 50%.
It’s dwarfed the performance of its U.S. counterpart, the iShares Core S&P 500 ETF (IVV).
To take a closer look at the trend, Shah zoomed in on two key Chinese companies – Baidu (BIDU) and Alibaba (BABA).
You probably know Baidu as the “Google of China.” Alibaba is its Amazon.
Both stocks have seen tremendous gains over the past month. Baidu is up 32% while Alibaba has risen close to 40%.
But after such big runs, investors are wondering whether the most significant gains are now behind us. To help answer that question, Shah picked them each apart for this week’s edition of Buy This, Not That.
As for whether the good times will last for Chinese stocks in general…
Shah has some concerns…
I’m not optimistic China will be able to reconcile the trillions of dollars of deeply embedded debt on the books of Chinese households, businesses, banks, and government institutions.
And as far as Chinese stocks soaring thanks to short-term buying schemes, all I can say is enjoy the ride while it lasts.
You can read his full analysis here… or keep scrolling for links to everything we published in Total Wealth this week.
Alex Moschina
Alex Moschina is the associate publisher of Manward Press. A gifted writer, editor and financial researcher, Alex’s career in publishing began more than a decade ago when he worked at one of the world’s leading providers of academic research and reference materials. Alex first cut his teeth in the realm of investing when he joined the team at White Cap Research in 2010. There he was charged with covering emerging market trends and investment opportunities. A stint as senior managing editor and editorial director at the prestigious Oxford Club followed. A frequent speaker at conferences and events, Alex has led educational workshops across the U.S. and Canada.
