"No Creo En La Desdolarización De La Economía, Pero Va A Crecer El Papel Del Yuan"

The recent growth data from China has caused quite a stir in the markets. It seems like the markets are living in a world of their own, detached from reality. Last year, the markets were driven by inflation and the unwanted consequence of rising interest rates. This year, however, inflation has started to decline and China's economy is slowly reopening with a growth rate of 4.5% - not far off from the 5% target for exports.

While there are still concerns about the ongoing banking crisis and the potential impact on brokerage firms like Swap and State Street, it seems that the crisis is somewhat contained. However, there is a significant risk looming - the Federal Reserve's interest rate hikes. If the Fed continues to raise interest rates, it won't just be small tech companies that suffer, but a wide range of businesses, including the real estate sector.

Despite these concerns, the markets have remained relatively stable, even bullish, throughout this year. This is quite logical considering the different landscape compared to the same time last year. We had the ongoing Ukraine crisis, the Fed raising interest rates, and China still dealing with COVID restrictions. Now, China has reopened its economy, COVID restrictions are lifting, and while the banking crisis remains a blip on the radar, it appears to be under control for now.

Of course, we can't ignore the potential impact of the Fed's actions on credit restriction. It would be wise for the Fed to pause and assess the effects of credit restriction before making any further interest rate increases. The reduction in credit availability will inevitably lead to decreased investment and consumption. In essence, it would have the same effect as raising interest rates. However, it remains to be seen whether the Fed will take a more measured approach or continue on its current path.

Hitting the Repeat Button: Echoes of the 2008 Crisis?

If the Federal Reserve fails to take note and continues to increase interest rates, we could very well be repeating the same mistakes that led to the 2008 financial crisis. As history has shown, once the Fed starts tightening the reins, it can have disastrous consequences. It's a matter of how much damage they are willing to inflict. The recent Fed meeting minutes indicate that many members are becoming aware of the potential harm they can cause. However, it is crucial to remember that economic comparisons never tell the whole story. Superimposing charts may seem impressive, but for every negative chart, there is a positive one. It's easy to find patterns and similarities, but it doesn't mean history will repeat itself exactly.

That being said, we cannot deny that there are risks and dormant issues that have the potential to resurface. While the current banking crisis seems contained, there are still bank-specific concerns like Swap and State Street. However, it's important to differentiate between banks that may face challenges due to the Fed's actions and banks that are fundamentally weak. The former can be attributed to the tightened credit environment, while the latter was a result of poor lending practices. The severity of the crisis will depend on how far the Fed is willing to push the economy.

The Dollar's Decline and the Path to Multilateralism

Another interesting observation in the market recently is the decline of the dollar index, reaching its biggest weekly decrease in three years. Many expect this decline to continue as more investors take short positions against the dollar. This could be viewed as a temporary event influenced by last year's dollar volatility. On the other hand, it could be seen as a larger trend towards a shift in the global currency market. We are witnessing a shift towards blocs, with the United States and China/Russia forming alliances. This changing political landscape could lead to a greater role for currencies like the yuan and the euro, as opposed to the dominance of the dollar. While the dollar will remain the most important currency, it may see a reduced presence in certain regions as a result of geopolitical tensions.

However, it's important to note that the notion of a complete "de-dollarization" is unlikely in the near term. When handling large sums of money, people still feel more secure using the dollar. That being said, as political alliances shift and tensions arise, we may see a greater emphasis on alternative currencies. This could lead to a more multilateral approach to currencies in the long run.

Excel Finance's Unique Discretionary Portfolio Management

In addition to discussing market trends and potential risks, it's worth mentioning Excel Finance's unique approach to discretionary portfolio management. What sets Excel Finance apart is their status as a truly independent company. They are not affiliated with any banks and do not receive commissions from the products they recommend. Instead, they focus on providing the best options in the market for their clients, while also reducing costs. Their portfolio management service is carried out in collaboration with a reputable bank, where they advise the bank on the management strategy for their clients.

Their approach also includes using the cleanest share classes of funds, which are the most cost-effective options available. By utilizing these share classes, clients can benefit from significant cost savings compared to retail fund options. Furthermore, Excel Finance's team of experienced professionals brings a wealth of knowledge and expertise to the table. With nearly 25 years of analyzing and selecting investment funds, Excel Finance offers a level of professionalism and experience that sets them apart from their competitors.

In terms of pricing, Excel Finance's discretionary portfolio management service is significantly more affordable compared to other options in the industry. They charge between 0.40% and 0.60% for portfolio management, depending on the complexity of the portfolio. This pricing structure ensures that clients receive high-quality management at a competitive price, without compromising on the level of analysis and expertise.

In conclusion, the recent developments in the Chinese economy, combined with the potential risks and market trends, highlight the need for a cautious approach. The actions of the Federal Reserve and the dynamics between major currencies like the dollar, yuan, and euro will play a significant role in shaping the future of the global economy. As for Excel Finance, their unique approach to discretionary portfolio management offers clients unparalleled independence, cost-effectiveness, and professional expertise.