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The Biggest Market Story Today is China, not Earnings

JP Gravitt

Last night, China (FXI) announced tax and liquidity reforms which should mean your portfolio may need a facelift for the rest of the year.  Specifically, China injected $74 billion into its banking system and cut local corporate taxes by almost another $1 billion.  The Chinese state council spoke of “uncertainty”, clearly alluding to the potential trade war brewing.  They also spoke of investments in infrastructure.  So how should this change your portfolio in the next several months. Conclusion:  You really shouldn’t go out and wholesale change your investment strategy.  But are some of these beaten down Chinese equities and commodity plays worth a look for a small part of your portfolio?  They are to me, as the risk reward just got a lot more compelling.  Remember the art of investing is sometimes seeing around the next corner.