2016 Challenges Already Rearing Their Ugly Heads
Tension in China and the Middle East roiled markets Monday morning.
As I forecast last fall, these two volatile situations are beginning to erupt.
The Shanghai stock market stopped trading after losing 7%, triggering a 400-point loss in the Dow Jones average.
The Chinese problem started after a very weak manufacturing report was issued, and this is only the first in a likely series of Chinese economic shock reports for 2016.
Given extremely depressed commodities prices resulting from tepid Chinese demand for metals, energy, and other industrial inputs, a weak manufacturing report was inevitable.
In addition to the trouble in China, there is serious tension in the Middle East.
Iran and Saudi Arabia are at loggerheads over the Saudi execution of a Shiite cleric and subsequent attacks on the Saudi embassy in Tehran.
This flashpoint was perhaps inevitable as well, seeing that Iran and the Saudis are on opposite sides in multiple regional conflicts.
Over the new year, our domestic economy will feel the impact of both of these global issues.
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