Evoqua Lists on the NYSE
November 28, 2017
American Funds video transcript: “U.S., China lead global growth slowdown”
Rob Lovelace: The market is anticipating this slowdown because of lower profit margins — again, rising wages, higher interest payments — because of rising interest rates, all of these factors coming in, but not a huge setback in terms of a synchronized decline like we had a decade ago, which is so burned into everybody's mind.
But the U.S. is the story, and I'll come back to that again in a minute because I think it's really important to focus on. And we can pick this up later, actually, in the conversation relative to the internet stocks and, really, the impact of how unique that is to the United States.
Will McKenna: Yeah.
Rob Lovelace: The second country I'll shift to is actually China. Historically, people have placed China in the emerging markets category, and I think we need to stop doing that. China is its own center of gravity, and emerging markets are the other category. China, as the second largest economy — and close to being the second largest stock market, depending on how you want to measure it — it, too, is slowing. Very hard to know exactly what the numbers are, but similar to the U.S., we are hearing from the companies that we talk to that things are definitely slowing there. And that was even before we saw the tariff and other issues come into it. And the tariffs will only —
Will McKenna: Exacerbate, yeah.
Rob Lovelace: Aggravate or exacerbate that and slow it down more. So, China is slowing. The U.S. is slowing. We already know from quantitative tightening that the emerging markets are slowing. So, poor Europe, which is caught in the middle of this — which tends to get, actually, a lot of its growth from China and a lot of its growth from the United States — is really in a pretty tough position, because it hasn't had the momentum, either going into the Great Financial Crisis or coming out of it, to really sustain itself and sustain its own growth. China was big enough to sustain its own growth. The U.S. is big enough to do it. Europe isn't.
So, it's a pretty tough situation economically around the world, and with the peak in corporate profits in both the Chinese context and a U.S. context, pretty hard for the other areas as well.
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