The Valor Blog.
Investment News and Views, Direct from Our Team.

China Quarantine

With much of China’s excesses being driven by internal forces due to their enormous stimulus, how much of its problems from these excesses will be quarantined to China and the commodities export countries?

Will a hard landing in China significantly affect a US recovery?

At Valor Private Wealth, we believe that the forces of a housing recovery will be stronger than the headwinds from a significant slowdown in China leading to continued moderate growth in the US.

Our investments are reflected in this manner with significant holdings in US based companies including US banks and housing related companies.

We have our largest holding in Berkshire Hathaway as we believe that their earnings will recover quite strongly with better results from Clayton manufactured homes, Benjamin Moore paints and Shaw industries carpets. Add this to the downside protection of Buffett’s buy back promise and you have a good recipe for limited downside and quite reasonable upside.

Whilst I have been seen to be quite negative on Australian mining and housing for the last 18 months and believe that we are just at the beginning of what could be a very rough patch for Australia, I am very confident that at some stage in the next few years, the US economy will begin to recover stronger than most expect as housing construction and the flow on effects return to more normal growth levels.

In the meantime, the politicians in the US are likely to have asinine arguments about debt ceilings and cause irrational markets to remain choppy. This stimulus junkies will be holding out for their next hit and if it doesnt come when they expect, their impatience could put some pressure on markets in the short term.