Now, while Brent prices have fallen to pre-“Ukraine invasion” levels last week, the extent of price increases in other non-energy items – which aren’t solely attributable to corporate price gouging – indicates that relief at the pump wouldn’t necessarily lead to relief for household savings. As it stands, figures released last Wednesday by the US Energy Information Administration suggested petrol demand had slipped to its lowest level for this time of year since 1996 which has many implications, some of them of a more fundamental nature on the economy (as opposed to just household savings).
Furthermore, given the high historical (and recent) correlation in inflation between the U.S. and Europe, it can be expected that similar trends will be seen in Europe as well.
In Conclusion
The facts presented should drive home the idea that even holding high-conviction Chinese assets might not prove to be an effective countermeasure for any of the risk posed by the weaknesses in both U.S. and European economies. If anything, the facts presented along with ever-increasing US Dollar Index level indicates that the recessionary phase continues to loom larger than before.
While this doesn’t bode well for “core” investments, there are alternatives available for tactically capitalizing on short-term trends in “satellite” investments.
Learn more about Exchange Traded Products providing exposure to top Chinese stocks for the upside here and the downside here. Similarly, learn more about DAX-related products for the upside here and the downside here.
