For decades, China has demonstrated a global economic status powerful enough to pull countries like the US into its orbit. With a massive low-cost labor market, incredible industrial infrastructure, and even an entertainment audience that affects our culture in America, China’s influence cannot be underestimated.

But what happens if China slows down in economic status? What if one of the world’s favorite fiscal goliaths stumbles in the face of COVID restrictions, decreasing demand, and energy cost influxes? Well, we may soon find out.

From Wall Street Journal:

The effects of China’s slowdown are showing up everywhere from German factories to Australian tourist spots. Exports are weakening in Asia as China’s neighbors watch their largest market sag. Companies including Apple Inc. and General Electric Co. warned investors about production and delivery problems stemming from China’s troubles, as well as dwindling sales.

Car sales in China have collapsed, hitting auto makers including BMW maker Bayerische Motoren Werke AG, Volkswagen AG and Tesla Inc. Tesla sold just 1,512 cars made at its Shanghai plant in April, down 98% from the more than 65,000 it sold in March, according to data released Tuesday by the China Passenger Car Association. Toyota Motor Corp. on Tuesday apologized for repeatedly missing its production plans, in part because of lockdowns in China, saying it expects to churn out 700,000 vehicles in May rather than the 750,000 it previously expected.

The collapse of the Chinese economy is more detrimental than you can imagine. It’s a compound problem because China is both our biggest manufacturer and one of our largest markets. Raw materials from all over the world make their way to this economic powerhouse and if they lose the means to produce anything with them, the entire world economy would see chaos.

Check the tag on the tongue of your shoes, on the back of your shirts, inside your cellphone… You’ll see that a great many of the items we purchase every day come from China. In fact, China produces 28.7% of global manufacturing output. If their economy eats it, ours could as well.

So, how should you hedge against this if companies like Apple AAPL, Nike NKE, AMD, even Colgate CL, and Kellogg’s K are so exposed to a shaking Chinese economy?

One word: Diversification.

Diversifying your portfolio has never been more important and by doing this you’ll see there are many ways you can hedge against China.

In the REIT world, putting your money in healthcare, storage, and residential REITs is a great way to offset some of the risk inherent in the retail, industrial, or hotel sectors. With money in self-contained property models like local hospitals, storage facilities, and homes, your investments are safe from the direct manufacturing uncertainties of retail or industrial sectors and the global nature of many hospitality REITs.

This isn’t to say you should focus exclusively on these categories, but it never hurts to have a dynamic portfolio full of diverse assets.

It’s no secret that the world has been dependent on China for quite some time now. I think right now is a really good time to assess our own dependencies on the People’s Republic. If we can break our individual addictions to the Chinese economy, the rest of the world may soon follow suit.

More Non-REIT News to Know About

Jerome Powell Lands Second Term

As our inflationary economy enters an all-time high, Federal Reserve Chair, Jerome Powell, has been selected to serve another term.

Yesterday, The Senate voted 80-19 to grant Powell four more years at the reigns of the central banks, ending a long-delayed vote that’s been in contention since President Biden nominated him last November.

“Chairman Powell’s leadership has helped spur economic growth while preserving the best-capitalized banking system in American history,” Sen. Patrick Toomey, the ranking Republican on the Senate Banking Committee, said in a statement.

Orchestrating a series of moves aimed at altering this insane downturn, Powell seems to have a good head on his shoulders. I think it’s important we let him play out his plans to ease inflation by incrementally upping interest rates. Obviously, this isn’t going to be an instant fix but it’s a move in the right direction.

The World According to REITs

Two REITs To Get You Through The Weekend

With the weekend fast approaching, there are only a few more trading hours to put a little cash into some sound investments. I thought I’d end the week by introducing some of the REITs that have me excited for the next stage of our economy – ornery as it is.

W.P. Carey

W.P. Carey Inc. (WPC) invests in properties leased to single tenants via NNN. They recently announced a merger with Corporate Property Associates, a publicly registered non-traded REIT, and are expecting benefits to include more liquidity and a combined portfolio with more power on the market.

The stock traded at $76.45 early this week, in a 52-week trading range of $71.72 to $86.48. The stock has a forward dividend yield of 5.5%.

Spirit Realty Capital

Spirit Realty Capital (SRC) is a triple net-lease REIT headquartered in Dallas, Texas. They’re a great REIT for tempering your portfolio against the turns of an anxious market as they’ve recently upgraded their portfolio for diversified cash flows by reducing tenant and industry concentrations. This has proven to grow both industrial and investment-grade business and served their balance sheet by expanding their pool of unencumbered properties and lowering net debt to earnings ratios.

They’re one of the few NYSE assets to perform with a upward-facing arrow in the last couple of days, their stock gaining nearly 4% during yesterday’s trading day.  

For decades, China has demonstrated a global economic status powerful enough to pull countries like the US into its orbit. With a massive low-cost labor market, incredible industrial infrastructure, and even an entertainment audience that affects our culture in America, China’s influence cannot be underestimated.

But what happens if China slows down in economic status? What if one of the world’s favorite fiscal goliaths stumbles in the face of COVID restrictions, decreasing demand, and energy cost influxes? Well, we may soon find out.

From Wall Street Journal:

The effects of China’s slowdown are showing up everywhere from German factories to Australian tourist spots. Exports are weakening in Asia as China’s neighbors watch their largest market sag. Companies including Apple Inc. and General Electric Co. warned investors about production and delivery problems stemming from China’s troubles, as well as dwindling sales.

Car sales in China have collapsed, hitting auto makers including BMW maker Bayerische Motoren Werke AG, Volkswagen AG and Tesla Inc. Tesla sold just 1,512 cars made at its Shanghai plant in April, down 98% from the more than 65,000 it sold in March, according to data released Tuesday by the China Passenger Car Association. Toyota Motor Corp. on Tuesday apologized for repeatedly missing its production plans, in part because of lockdowns in China, saying it expects to churn out 700,000 vehicles in May rather than the 750,000 it previously expected.

The collapse of the Chinese economy is more detrimental than you can imagine. It’s a compound problem because China is both our biggest manufacturer and one of our largest markets. Raw materials from all over the world make their way to this economic powerhouse and if they lose the means to produce anything with them, the entire world economy would see chaos.

Check the tag on the tongue of your shoes, on the back of your shirts, inside your cellphone… You’ll see that a great many of the items we purchase every day come from China. In fact, China produces 28.7% of global manufacturing output. If their economy eats it, ours could as well.

So, how should you hedge against this if companies like Apple, Nike, AMD, even Colgate and Kellogg’s are so exposed to a shaking Chinese economy?

One word: Diversification.

Diversifying your portfolio has never been more important and by doing this you’ll see there are many ways you can hedge against China.

In the REIT world, putting your money in healthcare, storage, and residential REITs is a great way to offset some of the risk inherent in the retail, industrial, or hotel sectors. With money in self-contained property models like local hospitals, storage facilities, and homes, your investments are safe from the direct manufacturing uncertainties of retail or industrial sectors and the global nature of many hospitality REITs.

This isn’t to say you should focus exclusively on these categories, but it never hurts to have a dynamic portfolio full of diverse assets.

It’s no secret that the world has been dependent on China for quite some time now. I think right now is a really good time to assess our own dependencies on the People’s Republic. If we can break our individual addictions to the Chinese economy, the rest of the world may soon follow suit.

More Non-REIT News to Know About

Jerome Powell Lands Second Term

As our inflationary economy enters an all-time high, Federal Reserve Chair, Jerome Powell, has been selected to serve another term.

Yesterday, The Senate voted 80-19 to grant Powell four more years at the reigns of the central banks, ending a long-delayed vote that’s been in contention since President Biden nominated him last November.

“Chairman Powell’s leadership has helped spur economic growth while preserving the best-capitalized banking system in American history,” Sen. Patrick Toomey, the ranking Republican on the Senate Banking Committee, said in a statement.

Orchestrating a series of moves aimed at altering this insane downturn, Powell seems to have a good head on his shoulders. I think it’s important we let him play out his plans to ease inflation by incrementally upping interest rates. Obviously, this isn’t going to be an instant fix but it’s a move in the right direction.

The World According to REITs

Two REITs To Get You Through The Weekend

With the weekend fast approaching, there are only a few more trading hours to put a little cash into some sound investments. I thought I’d end the week by introducing some of the REITs that have me excited for the next stage of our economy – ornery as it is.

W.P. Carey

W.P. Carey Inc. (WPC) invests in properties leased to single tenants via NNN. They recently announced a merger with Corporate Property Associates, a publicly registered non-traded REIT, and are expecting benefits to include more liquidity and a combined portfolio with more power on the market.

The stock traded at $76.45 early this week, in a 52-week trading range of $71.72 to $86.48. The stock has a forward dividend yield of 5.5%.

Spirit Realty Capital

Spirit Realty Capital (SRC) is a triple net-lease REIT headquartered in Dallas, Texas. They’re a great REIT for tempering your portfolio against the turns of an anxious market as they’ve recently upgraded their portfolio for diversified cash flows by reducing tenant and industry concentrations. This has proven to grow both industrial and investment-grade business and served their balance sheet by expanding their pool of unencumbered properties and lowering net debt-to-earnings ratios.

They’re one of the few NYSE assets to perform with a upward-facing arrow in the last couple of days, their stock gaining nearly 4% during yesterday’s trading day.