Each year, Boston Consulting Group (BCG) releases its in-depth report on high-net-worth individuals around the world; while it’s a piece that leaves money managers and others salivating, there are not-so-subtle messages on the economy that go well beyond generating commission checks.
For one, there’s the issue of dynamism in economies that create momentum and produce wealth. Consider two years ago when Pew Research published its finding on the most optimistic and pessimistic nations.
The United States didn’t appear at the top of either list, but the nations listed tell a story of momentum and economic systems that are working and infusing citizens with optimism.
Gross Domestic Product (GDP) Growth 2011- 2015:
- China 7.3%
- Peru 2.4%
- Vietnam 6.0%
- Senegal 4.7%
- Nigeria 6.3%
- India 7.3%
On the other hand, the troubles of Greece are well-known as that tiny nation that almost pulled the entire planet into the Mediterranean. France and Italy are in the same boat, whereas Argentina is an economic pariah of corruption and unpaid debt and Egypt remains the symbol for the failed Arab Spring.
Success begets success. However, not seen on the most optimistic list are those historically happy European nations of high taxes and economic status quo?
Where Are We Going?
“It isn't where you came from; it's where you're going that counts.”
¯ Ella Fitzgerald
So, where will the most wealth be created during the next four years? Asia – Pacific, driven by China and India as Eastern Europe lingers and Latin America stumbles after waves of corruption derailed the economy’s momentum in general; Brazil in particular.
More importantly, how much wealth will be generated from new sources and not simply helping the (very rich) become richer. New wealth in Asia-Pacific expects to double the rest of the worlds combined, and that includes North America.
This not only shifts power on a global basis, but it also will intensify the debate in America on how wealth is distributed. Sadly, the folks making the most noise have solutions that when put into practice have made the gap between the rich and poor more extreme.
Global Private Financial Trends |
2015 Total |
Source |
2020 Total |
|
Existing Wealth |
New Wealth |
|||
North America |
$60 |
13 |
3 |
76 |
Asia-Pacific |
37 |
8 |
15 |
60 |
West Europe |
41 |
4 |
4 |
49 |
Japan |
14 |
1 |
0 |
15 |
Latin America |
5 |
1 |
1 |
7 |
Eastern Europe |
4 |
0 |
1 |
5 |
America is the preeminent nation of the world, but it’s not preordained to stay on top. Yes, we have been blessed; however, we are allowed to either embrace those blessings or squander them. And we have been squandering them for a long time.
The Market
No one is breaking out Dow 18,000 hats, but there is a fair amount of excitement that the index finished past that psychological barrier. The bigger upside test comes with a close above 18,100, which almost ensures a re-testing of the all-time high.
Meanwhile, crude oil is now above $51.00; we could see the rally pick up steam as shorts cover and more signs of increased demand emerge. If you think it’s too hunky-dory, you’re not alone as Goldman (GS) is looking for a big dip, perhaps as much as 20%.
I take their warnings with a grain of salt- when they close all their positions and stop upgrading stocks to buy like they did yesterday morning, I’ll pay attention. On that note, some are also pointing to the so-called fear index (VIX) being too sanguine. There is some truth to the fact that we don’t see a lot of fear based on options trading, but the flow of funds and daily volume scream indifference, not overconfidence.
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