A brief note on "China vs the US", Emerging Markets, Turkey and Argentina

  • While US profits are projected to rise by 20% over the next year and the US capital spending outlook is good, rising US rates, trade tensions, strains in emerging markets and the situation in Italy 1 will limit equity market returns this year to single digits
  • The US has a lot to lose in a trade war given the high level of US corporate sales in China
  • Economic linkages between the US & China are much larger than between adversaries of the last 100 years; full-blown trade or military conflict is not inevitable
  • Don’t overgeneralize Turkey/Argentina whose fundamentals are worse than most EM nations

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