China continues to grow at a rapid rate (over 10% per annum), but the big news is that India is now growing about as fast as China. After talking to several Indian economists, we believe that India has grown over 11% in the last 3 months. All we can say to this is “Wow!”
China and India and a few other countries, primarily in Asia, are acting as catalysts and will continue to drag global economic growth higher.
This is one of the several reasons why we believe that the U.S. will not go into a serious recession even with higher interest rates and slower housing demand. We expect Europe and the commodity producing countries of the world to grow more rapidly than has been expected.
Our same themes appear to be timely, and our strategy of using market corrections to add to positions in our themes continues to make sense. They are the following:
• Growth of China, India and the Asian region creates investment opportunity in these markets.
• Energy demand will continue to grow; supply is not growing hence energy prices will rise.
• Non U.S. dollar based currencies will continue to appreciate.
• Demand for global financial services will grow rapidly.
• Industrial metals and precious metals will be needed to further global growth. Supply is stagnant and demand is rising, hence prices will rise.
• Transportation equipment is important for this growth to continue.
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