Submitted by Bill Blain of Mint Partners
What we don't know about Korea and China?
“The Chinese use two brush strokes for “crisis”. One brush stroke stands for danger, the other for opportunity.”
Everyone is guessing about North Korea! Who knows what happens next… Probably less than markets fear.. but that won’t stop us worrying about it…
The reaction of markets (on a US holiday) might mean the antics of the Hermit Kingdom are losing some of their capacity for immediate shock and destabilisation. Are markets becoming blasé about the repeated threats? Probably not - the pressure on asset prices and price volatility remains high as participants anticipate a wide range of outcomes.
What’s the right asset positioning? Risk on/off? What are the dangers in terms of the liquidity/return/safe-haven equation? Do nothing and hope it all plays out positively? (Hope is never a strategy.) How contained will it be? Take a defensive stance and miss upside if/when its resolved? Or buy the dips because the risks are massively overstated and its “opportunity”!
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