Continue reading...Does China matter? That’s a popular question throughout the investment community right now. The answer, however, is relatively simple: yes. Simple numbers can prove this point.
Earnings Performance According to FactSet, U.S. companies that generate more than 50% of their revenue from overseas have seen a collective earnings decline of 11.2% for the fourth quarter. U.S. companies that generate at least 50% of their revenue domestically, meanwhile, have seen their collective earnings increase 2.7% in the fourth quarter. Overseas revenue doesn’t mean China only, but as the second-largest economy in the world with a massive population China, has the biggest impact. Unfortunately, the following words and phrases are currently associated with China: deceleration, bank fraud, overbuilt, overleveraged and market manipulation.
Let’s be realistic here. The odds of China fixing all its problems and turning everything around on a sustainable basis are extremely low, at least for the...
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