Some Americans feel that President Donald Trump is taking the appropriate steps to help make America great again. They agree with his tough stance involving trade with China because they felt that the Chinese had been taking advantage of the United States for years. The Trump Administration has reiterated that the tariffs they are placing on China are to punish them for stealing intellectual property, as well as to finally help fix the current trade deficit with China. The Administration came out strong placing $50 billion in tariffs and are threatening more if China does indeed retaliate.While some media outlets are claiming that the United States is winning the trade war with China, economist Ted Bauman would disagree. He believes that the outcome for a trade war is that all parties involved end up losers.
While he believes the trade war will eventually lead to global economic issues if it continues, he feels that it has created an opportunity to buy Chinese equities at real bargains. Some financial analysts with a myopic view of the markets will advise individuals to stick with US stocks. Ted Bauman tends to look at the overall economy from a broad perspective. He says that the iShares China Large-Cap ETF has dropped around ten percent since the start of the year. This ETF tracks some of the largest publicly traded companies in China.
Ted Bauman believes that US equities are overvalued. He does not suggest that investors sell all their equities, but to rather look for areas that are undervalued and he feels the trade war between China and the US is the reason that Chinese stocks have fallen. Early in June, the Chinese yuan started to get hit as the trade war rhetoric between the Trump Administration and the Chinese government began to heat up. As the yuan took a nosedive, so too did company share prices in China. The Shanghai Composite is now down eighteen percent for the year. Ted Bauman feels that valuations for Chinese stocks have not been this attractive for several years and feels that the American investor may want to rotate from overvalued US stocks to cheaper Chinese stocks.
— Ted Bauman Guru (@TedBaumanGuru) November 2, 2018