Drama is all around

For anyone who was thinking that 2019 would offer some political stability and economic recovery, the year started pretty awful. Let’s take a look:

  1. Brexit – everything hints at a total disaster with the UKs decision to leave the EU. We can expect high market volatility and a lot of insecurity on how an unorganised Brexit will actually effect everyone.
    My take on this matter: The Brexit will be cancelled. I think everyone already understood, that the British government is not capable of managing something on such a huge scale. For investors, there may be some great opportunities to watch out for: Vodafone offers an all-time high dividend yield of 8,8%, GlaxoSmithKline is at 4,9%, and Royal Dutch Shell (B) is at 6,1%. It might be a good time to take a closer look and risk-oriented investors might consider building-up some first positions.
  2. Trump Impeachment – Another huge topic to look at. The investigation into a Russian collusion is proceeding very quickly and Trumps own people start turning on each other and on Trump. American news outlets don’t give us really any clear picture on what is happening. You can watch CNN or FOX discussing the same issue and you will get completely different interpretations and results depending on the channel you prefer to watch. However, in the end, something big will happen and this end might happen very soon. I am almost certain that we will see things clearing up in 2019.
    My take on this: Politics in the US are seriously messed up and Trump may survive this. If he does, the future is truly unpredictable and even more, I would then expect Trump to even win a re-election. If he doesn’t survive this drama, then we may see markets rise together with democrats regaining power. We would probably see stabilising tariffs, politicians focusing on trade and reducing international disputes and a generally speaking more positive sentiment. I would love to see that happen, but for now I remain sceptical.
  3. Chinas expansion – If you watched Mr. Xi’s New Years speech, you might actually get scared. Telling on television to his own troops to get ready for conflicts, and to emphasise his position about reserving the right to take Taiwan by any means including force is not a small thing. At the same time, we have the South China Sea boiling up, China’s investments in infrastructure and technology projects and companies across the globe, and a stronger than ever buildup of military power, intelligence and provocations with even the mightiest nations in the world.
    My take on this: China got some serious issues to tackle and apparently more and more challenges to control its economy and its population. A dangerous mix that has, historically speaking, often led governments who try everything to prevail in power to do stupid things. What worries me the most is that China seems absolutely not concerned about challenging not only the USA, but also Canada, Japan, all South East Asian nations and even Europe. All at the same time. Their tricky rhetoric and massive cash deployments across the globe are being met with more and more scepticism and might turn into a very negative sentiment by the end of this decade. I have only 1 Chinese company in my portfolio (Baozun) and will probably refrain from any further investments in the Chinese market, until it becomes more clear where this country is actually heading.
  4. European Dramas – with all the Brexit talks, the only other topic in the EU that is still coming up frequently, is Mr. Macron and his failure to find a proper communication channel to the French. The yellow-vest-movement shrank, but turned more violent and could gain new traction at any time. All this happens for one main reason: France is in trouble as its economic numbers don’t match up. But to be fair, it’s not only France. Spain, Greece, Italy… there are tons of problems to tackle and any of these countries could cause a major drama in 2019.
    My take on this: If the Brexit will be cancelled, then Europe will be just fine. On the other hand, if the UK really leaves the EU, the results will be unpredictable. We might see other countries willing to follow suit which could eventually destroy the EU as we know it. In terms of investments however, Europe is a paradise at the moment. So many great and undervalued stocks out there, that it’s hard to list them all.

I will keep it at this 4 points for this post, but there are actually so many other things and dramas to worry about, that there is only 1 conclusion that we can be truly sure off for 2019: It will be an exciting year.

Disclosure: I own all stocks mentioned in this article.

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