• 11 November 2017

What A Week - East Meets West

US stock market at all-time record highs.

Yes, again, or is that still? Then it had its first decent correction. Haven’t seen that in a while. The tech stocks were a little soft too, but this comes after huge gains. The broad US market looks ready to immediately just keep going higher, however. A bit like property prices the world over. And all of this general investor enthusiasm was supported rather significantly this week by President Trump’s visit to Beijing, China, or more accurately the level of personal welcome delivered by President Xi Jinping.

Beyond expectations reception

While there are no immediate wins, there was a distinct warm feeling between Presidents. Which is in all our best interests. There was a personal touch by President Xi Jinping, which was beyond the treatment received by previous heads of state to China. This was a big effort by China and it is entirely appropriate. Not so much because there is anything special about Trump in particular, but because this is China's coming of age. Now as an equal to the US, and therefore totally polite in all regards.

The importance of this moment should not be lost on any of us. This was an indeed an important historic moment for the world. Two world leaders accounting for 40% of the global economy. The mountain had indeed come to Mohammed. The world will never be the same again.

It will increasingly be a place of cultural balance, where there are three equal super-powers, politically, economically and militarily. Just as I presented at APEC in Russia in 2012. Putin in his speech complained that I had left the Rouble out? Russia remains a major player, as does India, but the world will otherwise be dominated and demarcated into three equally powerful regions for the next 50-100 years. Perhaps longer.

  • They are, the Americas lead by the USA.
  • Europe and Africa lead by the EU.
  • Asia led by China.

This is a nicely balanced world, to be honest. And the good relations and calming of the waters to some extent between these two superpowers will go a long way toward setting the world up or a continued period of great prosperity.

All assets classes from minerals to penthouses are likely to do very well in this new age we are all fortunate to be experiencing.

One of the reasons the US and even bizarrely the Australian market was a little softer at the end of the week was that it looks like the new tax reforms in the US will not actually become law until next year. Well, tax reform is not a video game. Why people expect instant gratification from such reforms is a little strange.

Regular readers will be aware I have been talking about the need for bold tax reform for nearly a decade. The situation is a complete debacle in Australia.

In the USA, the one out-standing positive President Trump has brought to the table is truly bold tax reform. This is at least the plan. It is important to understand that this is not about money for the rich, though it remains to be seen just how altruistic the final law passing is, that it is about an old first world power staying competitive with the new first world power of Asia.

That Australia, situated in Asia, cannot figure this out as quickly as America, just goes to show the low quality of Australian politics in general.

This current bout of tax reform, just like any major policy upheaval, will be thrown about as a political football for some time. It will not be a new game delivered overnight to your screen. Some people are suggesting sell stocks because historic tax reform may not happen in the US until next year, this is a completely laughable proposition.

We can only look to take advantage. Tax reform will come, and it will be both significant and positive for the US economy. It will not, however, be perfect. Perfection is impossible in the old democratic systems in which the west seems stuck.

Clifford Bennett

Related Posts

Onsite Managers/Caretakers – The Good, the Bad and the Ugly

Onsite Managers/Caretakers – The Good, the Bad and the Ugly

If you are a property investor who owns a unit, you may well have bought into a development whose Body Corporate engages an Onsite Manager or Caretaker (hereinafter referred to as an OSM). Now some OSM’s are good, and some are bad, and some are outright ugly! If your complex has a good one, breathe a sigh of relief...

🌟 Property Market Update with Clifford Bennett | June 2024 Edition 🌟

🌟 Property Market Update with Clifford Bennett | June 2024 Edition 🌟

Welcome to our latest property market update! In this video, renowned economist Clifford Bennett shares his expert insights on the current trends, challenges, and opportunities in the property market. Whether you're a homeowner, investor, or simply interested in real estate, this update is packed with valuable...

Western Australia leads nation in property investment growth, offering hope for renters

Western Australia leads nation in property investment growth, offering hope for renters

Western Australia has recorded the highest growth rate in property investment of any Australian state over the past year, with investor lending reaching a record $1.15 billion in April 2024, according to the latest ABS figures. Kevin Young, President of Property Club, said that property investment activity in WA has...

Become a Member Today!

Our mission is to help the average Australian learn the property market dynamics and discover the amazing opportunities that exist in real estate.