Why Investors Should Monitor Geopolitical Risks
Localized geopolitical risks like the tension in the Middle East are unlikely to cause substantial damage to the markets in the long run, though they could bolster oil prices in the short term.
While North Korea and South Korea (EWY) have initiated talks recently, North Korea’s nuclear ambitions mean that tensions will always remain in the region despite temporary overtures of peace from both sides.
The biggest political risk to markets could arise from a trade war that has been playing out ever since Donald Trump came to power.
The S&P 500 Index plunged 4.6% during the first four trading days of February, while the Dow Jones Industrial Average and the NASDAQ Composite Index dipped 4.7% and 4.0%, respectively.
The repeal of the tax deduction for high medical expenses may reduce the number of taxpayers opting for costly medical technologies and services.
The tax reform bills passed by the US House and Senate reduce the corporate tax rate from 35.0% to 20.0%. According to Credit Suisse, healthcare companies pay corporate taxes as high as 30.2%.
As part of President Trump’s extended trip to Asia, he plans to visit China on November 8. Notably, China’s trade data is expected on the same day.
In the last week of September 2017, Donald Trump’s administration released a comprehensive synopsis of proposed changes to the tax code.
China manufactures only 13% of the world’s ICs. The nation imports more than $200 billion in chips annually, which created an estimated annual trade deficit of $150 billion in 2014.
In January 2017, the President’s Council of Advisors on Science and Technology published a report that called for the government to protect US companies’ leadership positions.