An international perspective can be informative
I've found it amusing that each one of my kids got to travel to Europe, without me, before I got the chance to go "across the pond" myself at age 52. Of course, I paid for all these galivanting young adults through various school programs, and I suppose this could have made me bitter in a whimsical sort of way, but the truth is it was some of the best money our family could have spent. Each of them came back from their studies abroad, more cultured, more mature and with a better perspective on the world.
Not having this overseas travel experience until later in my life made it even more interesting and fulfilling when my wife and I hosted two different exchange students, one from Thailand, one from Spain. Each of these young women brought so much to our home, and while we have kept in touch with both, Ane from Northern Spain has stayed closely connected to us, becoming nothing short of an adopted daughter. I sometimes joke that Ane texts us more than our actual kids. She spent the fall and the holidays with us last year.
When the time finally came to travel to Europe myself, visiting Ane's small city and meeting her family was to be the highlight of the trip. I wanted to experience Spain in the most authentic way, and visiting her town, which is about the size of Valparaiso, and meeting a new family we already had so much in common with seemed like a great way to do so.
As I prepared for my trip, I admit my expectations were not aligned with my eventual observations. I truly expected to find a place pretty much like the U.S. only where everyone spoke Spanish. The trip started in Barcelona, where some of my expectations were validated, I imagine all big western cities share certain commonalities, but the longer we spent in Barcelona, the more "macro" differences started to emerge.
I'm a news junky, following economics, politics and especially markets even on vacation. The first thing I noticed when I turned on the news in the hotel room in Barcelona is how non-Spain focused it was. Spain's issues and politics were part of the programming, but a fairly small part. Much more of the focus was on European issues, and even beyond that, American issues, and Asian issues. The news there was simply much more internationalist than it is here.
On the road trip once outside of Barcelona, heading to Pamplona, Bilboa and eventually Ane's town Durango, it became further apparent this wasn't "America only everyone spoke Spanish", the people we met thought differently, worked differently and experienced life differently than we do in the U.S. Again however, the people we encountered seemed more globally aware. Everyone certainly had an opinion on American politics, especially Donald Trump, and I was embarrassed to admit I didn't even know the name of Spain's President. After the trip I committed to work on being more globally aware, and less American centric.
So it is in this spirit that I will call attention to something I think all Americans might want to be aware of. Recession. In the last few weeks recession has been recognized in the U.K., Ireland, Finland, Germany and Japan. Beyond these major economies, we've discussed the problems with the biggest domino in the line, China, and it's hard to image how, if this centrally planned economy provided open and accurate economic data, this nation would not also be added to the recession list. If we make an assumption, based on the market performance and credit conditions, China is either in or will be in recession, then this puts the Chinese trading partner economies of Australia and the Pacific rim at risk as well.
To this point, none of the recessions being experienced in these major world economies has emerged as particularly deep, but as Warren Buffet famously says, "it's only when the tide goes out that we find out who has been swimming naked", and recessions have a tendency to reveal structural problems which had been previously unheeded.
Does this mean I think we are destined for recession in the U.S.? Not particularly. Each of these nations have different demographics, had different responses to COVID and face different economic challenges than we do here. It would be foolish however to remain unaware and unprepared for a trend this widespread.
It's been said when America sneezes the world catches a cold, it'll be important to see what happens in the states when the world sneezes first.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Stock investing includes risks, including fluctuating prices and loss of principal. No investment strategy can guarantee a profit or preserve against loss. Past performance is not a guarantee of future results. Marc Ruiz is a wealth advisor and partner with Oak Partners and registered representative of LPL Financial. Contact Marc at marc.ruiz@oakpartners.com. Securities offered through LPL Financial, member FINRA/SIPC.
