02/29/2016
4 Global and Domestic Stories That Should Be On U.S. Investors’ Radar

4 Global and Domestic Stories That Should Be On U.S. Investors’ Radar

As the United States economy continues its long climb to recovery, investors committed to reaching their long-term goals need to keep two questions in mind. First, what major issues pose economic risks elsewhere in the world? Second, what opportunities exist?

Financial planning is based on sound risk management and identifying opportunities. Below are several major stories serious investors need to follow.

Europe: Italy

In the European region, Italy faces serious problems. As the third largest economy in the Eurozone after Germany and France, their struggles heavily affect the rest of the market. At the moment, their banking system is under tremendous pressure. The interconnectedness of European financial systems means one country’s losses can quickly turn up elsewhere. Even the perception of harm can bring real volatility to neighboring markets. Escalating tensions between Italy and Germany could pose a real threat to the unity of the Eurozone.

Asia: Japan vs. China

In Asia, Japan’s recent decisions to impose negative interest rates and has fueled considerable uncertainty. In addition, the central bank’s decision to essentially monetize Japanese government debt has not helped the situation. Japan, however, is still perceived as having a stable economy. That being said, some experts state that the disparity between perception and reality with regard to Japan’s economy presents an even greater short-term risk than the financial troubles in China.

In addition to these external pressure, two stories to follow in the U.S. are the well-covered spike in oil prices and ballooning U.S. dollar-denominated debt.

Oil Price Recovery

Significant price increases almost always follow oil price declines. European and Asian markets, especially China and Japan, have benefitted from low oil prices—two or three times as much as the U.S. on an economic basis. Any bounce back in oil prices would hit those economies hard, exacerbating their current issues. We’ve already seen an improvement in oil prices after Iran agreed to a Russia-Saudi move to freeze output. The question is whether or not oil prices have really hit bottom.

Ballooning U.S. Dollar-Denominated Debt

In countries outside the U.S., there has been an enormous increase in U.S. dollar-denominated debt. Weak commodity markets combined with a strong dollar present a slow-burning crisis that could disrupt financial markets worldwide. Though the media has covered the problem, the tangible effect of increasing U.S. dollar-denominated debt abroad is still unknown.

Washington, D.C. Financial Planning and Wealth Management from

Markets are unpredictable, but the experienced financial planners and wealth management professionals at OptiFour Integrated Wealth Management can help you manage risk and seize opportunities as they arise. For more information on our personalized approach to wealth management, please visit our homepage.

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