In addition to rounding up the week’s important issues in the financial markets, we’ve also added brief thoughts on what effects on wealth and investment management you should watch for, which we’ll continue to highlight each week.

Market Action:

In a generally quiet week for markets, uncertainty over China took center-stage. While the Chinese economy is on track to meet the government’s 6.5 percent growth target for the year, rising property prices (up 25% this year alone in major cities) suggest that the growth could simply be a credit bubble. China has made major strides at economic self-sufficiency: manufacturers now source 70% of their inputs from local suppliers, and China is on pace to have the largest global passenger aviation market by 2024. Still, emerging markets broadly continue to import services from developed markets. The outlook on the Sino-American relationship also remains uncertain: while the Philippines have started moving away from Washington towards Beijing and while Chinese hackers have targeted the U.S. Navy, the U.S. Treasury dialed back its criticisms.

In the developed world, the outlook remained largely unchanged. The U.S. economy continued to expand early this month despite uncertainty over the election, though industrial production came in slightly weaker than expected. Echoing recent central bank commentary around the world, Janet Yellen promoted the idea of allowing the economy to run slightly hot in the short-term, though many observers might underestimate how fast the U.S. should be growing. Mario Draghi of the European Central Bank also remained cagey on when quantitative easing might end, despite Ray Dalio’s exhortations that it must continue.

What to Watch:


The Polly Portfolio Team