TOM BUTCHER: I’m here today with David Schassler who heads up VanEck’s Portfolio and Risk Solutions or PARS group. David, thanks so much for joining me today.
DAVID SCHASSLER: Tom, thank you very much.
BUTCHER: What do you see as the broad risks in the market at the moment?
SCHASSLER: There’s a lot of risks right now in the market. Global growth has been slowing for some time. We’ve been talking about that for a while now. You layer on tariffs, you layer on increasing interest rates, and it puts the market in a pretty vulnerable spot. Those are the risks.
While economic growth in the United States hasn’t decelerated steeply yet, growth has been declining in several developed markets and some major emerging markets. As the graph above shows, Eurozone growth has been slowing over the past year or so. Germany’s and France’s growth has been particularly sluggish.
Meanwhile, growth in China, the world’s second-biggest economy, is the slowest it’s been in 28 years. The economy grew 6.4% year-over-year in last year’s fourth quarter.
The US economy faces several headwinds. In addition to showing signs of a slowdown, such as lower consumer confidence and purchasing managers’ index numbers and a slowing real estate sector, the US economy is facing higher interest rates, which could cripple the economy. The ongoing US-China tensions could certainly impact both countries and have ripple effects around the globe.
These factors have weighed on US and global stock markets lately. The S&P 500 (VOO) has fallen 10% since October, despite the recent bounceback. Global markets have seen similar declines. In these uncertain times, investors may want to add ballast to their portfolios, which we’ll discuss later this series.