Camelot Portfolios Talking Points

Chinese 19th National Congress meets with continued Economic Growth

This past week, Chinese leader Xi Jinping kicked off the 19th national congress. In China, congress is reshuffle every 5 years with members of the communist party deciding on leadership. The meeting consisted of 2200 delegates across different regions of China, and the meeting is very similar in manner to a US partisan convention (Washington Post). The party decided that Xi Jinping remains as the leader of the party and president of China. The president decided to have 7 members as part of the top leadership, and have been a part of Xi inner circle for years (Washington Post).

Other precedents come out of this national meeting that revise the constitution and guide the county over the next 5 years. Revisions to the constitution included “Xi Jinping thought on socialism with Chinese characteristics for a new era,” which is similar to former Chinese president’s mark on the Chinese constitution (Tweed).

As the meeting wraps up this week in Beijing, signs point to a continual economic vision. The country’s GDP has continued to grow at a 6.8 percent rate as of the 3rd quarter (Economics). Chinese leadership has adjusted policies over the past couple of years by regulating housing and modifying the securities exchanges, but there are still concerns over the state run enterprises’ ability to keep the economy growing (Tweed).

ECB Continues Quantitative Easing

On Thursday, the European Central Bank announced it will keep up its bond buying program. It will decrease next month to €30 billion from €60 billion (Draghi). This will continue until September of 2018. Interest rates will remain unchanged at 0 percent (Draghi). Changes may be made to the bond buying program if economic conditions warrant unfavorable pressures on the EU (Draghi). The target inflation level continues to be at or below 2% across Europe, and asset purchases can be adjusted depending on headline inflation (Draghi).

The ECB reiterated other policy changes should be implemented by European members to strengthen economic potential. One of the highlighted areas are structural reforms by countries to boost productivity and lower non-transition unemployment (Draghi). The other major policy implementation is adjusting fiscal policies towards growth friendly environments. Whether member countries’ governments will aspire to implanting these may not be a high priority (Draghi). The president is making the point that members need to be able to stand on their own two feet, but agendas can be contradictory for different member states.

 Compiled by the Camelot Portfolios Investment Committee

Darren Munn, CFA, Chief Investment Officer

Eric Kartman, Research Analyst

Drew Steinman, CPA, Trader/Research

Zach Hartenburg, Trader/Analyst

Frank Echelmeyer, MBA, CKA®, Advisor Consultant

-for Broker/Dealer and RIA use only-

 References

Draghi, Mario. "Press Conference." October 2017. European Central Bank. 2017.

Economics, Trading. Trading Economics. May 2017. 2017.

Tweed, David. "What We Learned on the Final Day of China’s 19th Party Congress." October 2017. Bloomberg. 2017.

Washington Post. "China’s top leaders are meeting. What’s at stake?" 2017. Washington Post. 2017.

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