Factory data released by Beijing has shown signs that the Chinese government’s push to restart the economy has seen some early results. The National Bureau of Statistics found that China’s industrial production increased by 3.9% in April, its first rise since the beginning of the year. The increase beat even analysts’ projected rise of 1.5%.
Following the figures’ release, early Friday trading saw European stocks buoyed. France’s CAC 40 rose by 1%, Germany’s DAX by 1.3%, and London’s FTSE 100 by 1.3%. The pan-European STOXX 600 index saw an increase of 1.2%.
US futures also showed signs of improving, with the S&P 500 and Dow Jones Industrial Average futures rising by more than 0.3% each, and Nasdaq by 0.5%.
These positive signs were later reversed, however, as it emerged that the US government intends to block microchip shipments to Chinese telecommunications giant Huawei, a move likely to escalate tensions between the two countries. As a consequence, the S&P 500 and the DOW slipped by 1.1%, with Nasdaq ending 1.4% in the red.
China’s own stock indexes saw little change, with the Shanghai composite finishing 0.07% down. Elsewhere in Asia, South Korea’s Kospi rose by 0.12% and Japan’s Nikkei by 0.62%, apparently undisturbed by China’s industrial growth or trade tensions.
This is the message from Nigel Green, the chief executive and founder of deVere Group, as G-7 finance ministers and central bank officials are due to hold a teleconference to discuss the issue on Tuesday.
US Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell will lead a conference call taking place before Wall Street opens. Bank of Japan Governor Haruhiko Kuroda and European Central Bank President Christine Lagarde are also on the call, amongst others.
Mr Green notes: “For many, the joint statement will not go far enough, and there will be doubts about the effectiveness. This disappointment will dampen the market reaction somewhat.
“However, in general, the markets are looking for a reason to return to being bullish – which has been their default position for an unusually long time.
“This teleconference between G-7 finance ministers and central bankers will likely provide some of the reassurance they seek.”
He continues: “Many investors will be seeking to buy ahead of any potential measures aimed at cushioning the coronavirus blow kicking in, in order to take advantage of the current lower entry points and, therefore, the opportunities, while reducing risk at the same time.”
Last week, the deVere CEO said: “Until such time as governments pump liquidity into the markets, markets will be jittery triggering sell-offs.”
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Mr Green affirms: “It was billed as ‘the worst global market sell-off since the 2008 crash’ but it then became an important buying-opportunity for many investors.
“Now, with a more coordinated international response in the pipeline, many investors can be expected to jump off the sidelines again.”
Previously, he noted: “In the current volatile environment, investors - including myself - will be revising their portfolios and drip-feeding new money into the market.”
The deVere CEO concludes: “Central banks and finance ministers of the G7 discussing an action plan to take on the far-reaching impact of coronavirus will buoy investors.
“Many will be seeking to increase their exposure to the markets ahead of the implementation of any measures that are rolled out as a result of this conversation.”
Still, there are countless success stories of humble immigrants coming to the US with not much more than their dreams (and a hard work ethic), beating the odds, and becoming millionaires (and in many cases, billionaires). Elon Musk of Tesla is one of the more recent examples, but there are thousands of other immigrants who came to the US, put in the work, and achieved their dreams.
So then, how does one start the process of becoming a millionaire? What are some of the nuances of the US economy that immigrants need to be aware of? Should you invest in real estate? What about the stock market, or its less-than-stable cousin cryptocurrency?
Whether you’re looking for tips on forming an investment strategy, want to learn more about how the US economy works, or simply need some advice on saving money, we have you covered. Below we cover everything you’ll need to be prepared for the process of becoming a millionaire in the US.
Million Dollar Saving Strategies
Believe it or not, most people have the ability to save up to a million dollars in their lifetime. Even if you’re not making a six-figure salary, you can easily employ some basic saving strategies to stretch your dollars into a million (over several years, of course).
With that being said, there are a few major variables that can affect how long it will take you to save (up to) a million dollars. These variables are listed below:
- What your annual revenue is (i.e. how much money you earn per year)
- What your annual expenses are
- How much money you’re able to save on a monthly/yearly basis
- What the growth rate of your investment(s) is
- What your savings rate is (i.e. the percentage you’re saving relative to your income)
The majority of financial planners in the US recommend saving at least 10 to 15% of your annual income. If at all possible, and you want to increase your savings rate, you should try to up that percentage (at least a little bit). Saving as much as possible, cutting costs when it makes sense, and living frugally (note: not cheaply) can all help to maximize your savings strategy.
Making Your First Million Will Be Difficult: Prepare Yourself
Lots of people have the quintessential romantic notion that they’ll work hard for a few years, meet the right people, the stars will align, etc., and that making their first million will somehow “just happen.” However, the reality of the situation is that making your first million dollars is almost always an uphill battle.
Lots of people have the quintessential romantic notion that they’ll work hard for a few years, meet the right people, the stars will align, etc., and that making their first million will somehow “just happen.” However, the reality of the situation is that making your first million dollars is almost always an uphill battle.
Luckily, though, that battle really only applies for the first million. As you should know by now, it takes money to make money (and having a million dollars to invest in your business ideas/investments makes it a lot easier to increase your revenue). There are tens of millions of millionaires in the US, and many of those are immigrants.
Indian-born immigrants account for many of these millionaires. But millionaires can come from anywhere and achieve their wealth through different methods, which means that it’s possible for anyone to become a millionaire - you just need to understand that it will take a certain work ethic and a lot of financial savvy.
Note: If you’re an immigrant looking to start saving money, you should think about finding a side hustle (or two, or three). Most independently wealthy individuals amassed their wealth through hard work (i.e. not just working a basic 9 to 5). Jobs for Indians in the US can be found via countless online resources.
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Quick Tips for Your First Million
Use some of the basic tips posted below to increase your chances of becoming a millionaire. Remember, becoming a millionaire in the US should be thought of as a journey, and emphasizing the actual process (rather than the result) is what will elevate your finances to the next level.
- Focus on finding investment opportunities to increase your annual revenue
- Increasing your number of revenue streams is vastly undervalued (and very important)
- Avoid taking on debt (even if it’s for business reasons)
- Live as frugally as possible (but don’t neglect your health or mental well-being)
- Constantly be learning and developing new skillsets
- Look for new employment opportunities and/or side hustles that can increase your revenue stream
- Save as much money as possible and then invest that money into emerging markets
This morning's news comes as no surprise given the state of play, but as the Dow Jones hits its third-worst point in history, investors are waking up to the prospect that this may be just the beginning of what’s to come.
Some economists are warning that the pandemic could push the Bank of Canada and the US Federal Reserve to consider cutting interest rates sooner rather than later; a clear sign of more to come. Benjamin Tal, deputy chief economist at CIBC Capital Markets, told The Financial Post: “It is reasonable to assume that coronavirus is going to last longer given the infection rate is higher than SARS and is still climbing. That itself, might convince the Bank of Canada and even the US Fed to cut interest rates. I wouldn’t be surprised.”
“This is just the beginning of coronavirus, and there is a consensus starting to be generated that maybe, it will last longer than expected.”
In terms of numbers, the Dow Jones Industrial Average dropped 1,031 points, or 3.56% on Monday, while the S&P 500 plunged 3.3%, the biggest drop since last August. Global demand for oil has stalled, leaving the price to fall as much as 4% over the weekend. The price of gold on the other hand, went up, as investors attempt to put their money where it’s safe.
According to Frances Donald, chief economist at Manulife Investment Management: “The virus spread comes at a time when companies are already facing significant inventory restocking and a stalling in global manufacturing following the application of tariffs and overall trade tension…Coronavirus is adding salt to the wound.”
The good news is that based on past research from the Bespoke Investment Group, over the past 11 years, declines of more than 2% for the S&P 500 have resulted in healthy rebounds, particularly when the largest drop happens on a Monday. However, both analysts and investors are highly sceptical moving forward, and the next few weeks should give some indication of how stocks will play out in the wake of coronavirus’ furore.
As we celebrate the last decade of fintech, one thing that has stood out is the impact digital lending has had on consumer lending habits - and their options. With more financing options available than ever before, the market is fraught with lending options to suit each need, credit score and repayment condition. Online instalment loans have exploded onto the scene, giving credit card usage a run for its money, while peer to peer lending platforms are now the norm.
In the industry, experts are already looking ahead to 2020 and beyond, predicting the prioritisation of financial health and the vertical integration of fintech across other key industries such as healthcare.
Here are some of the decisions consumers need to keep in mind when considering the multiple fintech credit options available today.
Explore Their Choices
By the end of the first quarter in 2019, 19.3 million Americans had at least one personal unsecured loan outstanding, mainly thanks to the rise of fintech. Wider access to finance options has meant that more of them are turning to personal loans as they continue to live paycheck to paycheck. However, as with most personal unsecured loans, they come with a higher price tag. For unsecured personal loans, the interest rates can range from 5 percent to as high as 36 percent, much higher than the average 19 percent credit card interest rate charged for new credit card accounts. This makes it even more important that consumers do their due diligence when searching for the best loans online.
In 2019, Bankrate put the average interest rate for personal loans at 11 %, and with the influx of online instalment loan lenders, there are even more options with lower rate options. For years, consumers looking for additional finance have thought that high-interest credit cards were their only choice. Now, with the aid of online comparison platforms, consumers can easily find an interest rate they are comfortable with, and more importantly, there is more transparency when it comes to the cost of choosing that particular route.
In 2019, Bankrate put the average interest rate for personal loans at 11 %, and with the influx of online instalment loan lenders, there are even more options with lower rate options.
Check Repayment Terms And Conditions - Including Early Settlement Charges
Yet, this does not mean that borrowers are any more knowledgeable when it comes to the terms and conditions of the loans they are borrowing. In fact, in the United Kingdom, 60 percent of them do not know the rate of their loans, according to research from Mintel, while in the United States of America, Americans are similarly ill-informed. The same can be said for their financial health. In 2019, 43 percent of them didn’t know their FICO scores, a key determinant of their creditworthiness for a personal loan.
However, checking credit scores is now simpler than ever, thanks to credit bureaus and lenders like American Express offering online or mobile login and checking features. Most major credit card issuers offer a view at consumer credit scores from at least one of the three main credit bureaus. Similarly, checking the fine print of personal loans such as passed on charges or early settlement charges that may drive up the total cost of the loan are important. For example, three out of four student loan borrowers (including private loans) do not know what effect their death would have on their loans.
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Assess the Impact on Their Credit Score
Fintech lending options are not only lowering the costs of borrowing, but they are also minimising the reliance on credit scoring as a main determinant of loans. This means borrowers with no past credit scores or a low score can easily get a personal loan, whether it is backed by traditional lenders like the bank or more modern peer to peer lending platforms. This does not necessarily signify that the standards of credit scores have completely been erased. Today’s fintech borrower has a FICO score of 650, compared to the 649 FICO held by traditional bank borrowers. However, a lender with a good credit score may also want to consider the additional credit options open to them, such as approval for credit card offers with 0 percent purchases and balance transfers, lowering the overall cost of borrowing.
Finally, it is interesting to note that the age market that currently holds the largest share of the fintech personal loan market is Gen X (ages 38-52) and Gen Y (ages 24-37). This captures the most tech-savvy and outspoken demographics of the market, matching up perfectly against the transparency and personalisation that fintech loans now offer.
However, even with these added benefits of fintech borrowing, there still remains a basic question that consumers must answer before they enter the world of borrowing: what is the best personal loan option for me?
This is the warning from Nigel Green, deVere Group CEO and founder, as the world’s largest cryptocurrency jumped more than 4% on comments made by Jerome Powell that the Fed is investing a significant amount into digital currency development.
Mr Green states: “This is further evidence that not only all major banks, government agencies, plus most sectors including tech, entertainment and real estate, are piling into cryptocurrencies – but that central banks are too.
“The previously sceptical Fed has not, until now, admitted how rapidly digital currencies could become a systemic risk to the US dollar’s status as global reserve currency.
“This is a major step in underscoring – especially to those backward-looking traditionalists – that, whether they like it or not, digital global currencies are not only the future of money, they are increasingly the present too.”
He continues: “The development from the Fed comes following news that China – a communist state and the US’s main economic rival – is currently developing what has been described as an all-powerful cryptocurrency. It could be ready this year and be the world’s sovereign digital currency.”
Mr Green goes on to say: “Whilst there will be minor peaks and troughs – as in all markets - I predict the overall trajectory of Bitcoin to remain upward for the next few months.
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“Besides increasing institutional awareness and development, other major factors driving its price advance will be coronavirus.
“Bitcoin’s price is likely to continue to jump until the coronavirus peaks because of the growing consensus that the digital currency is a safe-haven asset.
“Its status comes from the fact that it is a store of value, scarce, perceived as being resistant to inflation, and a hedge against turmoil in traditional markets.”
He adds: “Another major price driver will be the next halving event.
“The code for mining Bitcoin halves around every four years and the next one is set for May this year. When the code halves, miners receive 50% fewer coins every few minutes. History shows that there is typically a considerable Bitcoin surge resulting from halving events.”
The deVere CEO concludes: “The Fed’s public acknowledgement of cryptocurrencies was important, but most investors have already known that major central banks around the world are developing crypto.
“As such, the main drivers for Bitcoin price for the next few months will remain coronavirus and May’s having event.”
(Source: deVere Group)
Delving into the latest impacts of Donald Trump’s impeachment trials on investors around the world, Wael-Al-Nahedh, CEO at Spearvest, gives us a rundown on the influence of global politics and the volatility of investment in 2020.
After three years of failed negotiations, sharp words, a prime ministerial resignation and a Christmas general election, at long last the UK government has a clear majority and the overall decision on the country’s future relationship with the European Union (EU) has been agreed. On top of this, China and the US trade deal tensions seem to be simmering down and global markets can look forward into what we all hope will be an extended period of global market stability. Meanwhile the ongoing stand-off between Iran and the world’s biggest economy appears to have quietened down, at least for the moment.
What’s more, in December 2019 and after months of speculation, the world watched as Donald Trump became only the third president of the United States history to be impeached, only to be swiftly acquitted, as was expected to happen given the Republican majority in the Senate.
However, as recent events in Wuhan, China have proven, major challenges can appear suddenly and without warning. The fast-spreading Coronavirus in Wuhan has already had a substantial impact on the Chinese economy. This crisis has led to fears around international travel and public health emergencies, in turn damaging supply chains and knocking investor confidence just as it was starting to bounce back.
This was a reminder that repercussions from local risks can have a global impact on financial markets. Specifically, what are the current challenges and how can investors navigate these situations?
Financial Markets throughout election year
All eyes will be on the US election this year, and many investors will tread cautiously in the US stock market depending on updates and promises in policy, and polling predictions when it comes to the people’s favourite candidate.
In the short term, the election can affect corporate confidence due to Trump’s business-friendly policies, such as his reform on corporate tax, could be at risk of being replaced by more topical economically viable policy.
In the short term, the election can affect corporate confidence due to Trump’s business-friendly policies, such as his reform on corporate tax, could be at risk of being replaced by more topical economically viable policy.
Alternatively, we might see certain sectors flourish from now until election day, as trade deals are renegotiated or tariffs on foreign goods are imposed or revoked. It was announced this week that China will halve tariffs on some US imports as it moves quickly to implement its ‘phase one’ trade deal.
History dictates that election years often offer prosperity when it comes to the stock market, regardless of who is eventually elected. In fact, when examining the return of the S&P 500 Index for each of the 23 election years since 1928, only four have been negative.
US-Iranian tension
US and Iran haven’t had the best of relations for a few decades now, and US sanctions on Iran’s oil exports last year had already crippled the Iranian economy. And, to see the new year in, tensions flared as a US-led drone strike killed General Qasem Soleimani in Baghdad.
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On January 10th, Trump announced sanctions that went beyond oil and gas and now targeted construction, mining, manufacturing and textile goods. As a result, trade with Iran is flatlining worldwide and investors, companies and lenders should do well to avoid any partnership or investment with Iranian goods or businesses, such as the recently blacklisted, Mahan Air.
On the other hand, market impact hasn’t been as severe as one might have initially expected. Oil prices are still below the level they hit in September 2-19 after the Saudi Aramco oil attack.
The situation in China
The most significant impact on the global economy has emerged as a result of a Global Health Crisis, as a new strain of Coronavirus has all but isolated China from the rest of the world. The true impact on the economy resulting of this terrible human tragedy, is as yet unknown.
Short-term impact on the stock market in China has correlated to the global significance of this devastating virus: stock markets in china saw their biggest fall in five years as traders rushed to sell-off Asian equites amid continued fears about the impact of the Coronavirus on the global economy. Investors should keep a keen eye on the spread of this virus, as we could see it affect international markets quite severely should the number of cases of infection increase dramatically in key markets such as the US or Germany, for example.
The virus has also had a substantial impact on oil markets, with prices declining sharply as demand from China dissipates through diminished air travel, road transportation and manufacturing. Given the fact that China under normal circumstances consumes 13 of every 100 barrels of oil the world produces, we can expect the impact on oil markets to further increase should this global health crisis widen.
If not contained, retail sales and travel could suffer consequently in the next few months, especially as industrial production struggles to recover after last year’s extended slump and the consequences of the US-China trade war, which has already cut Chinese economic growth to its lowest level in 29 years.
How to navigate challenges
Such episodes of global nervousness often - counter-intuitively - represent considerable opportunity for those investors who are willing to buy when others are selling. Attractive opportunities typically arise in times of high volatility, which brings to attention the importance of relying on independent and unbiased advice before deciding to invest at a time of great global economic and political uncertainty.
Some of the highest returns in global markets often happen around periods of high volatility in an unpredictable fashion, and that is why thorough planning and a long time horizon give investors a great advantage. Over 10 years, equities have earned excess returns over cash 95% of the time. The return of a buy-and-hold investor in the S&P 500 over the past 20 years has been more than 220%, versus just 42% for someone who sold at each new all-time high and waited for a 5% pullback to reinvest.
Finally, one should always diversify an investment portfolio adding into low-correlated investments, include income-generating hard assets (like real estate), invest with a long-term horizon, and of course increase the understanding of risks.
With its strong influence on the multilateral trading system, the US is undoubtedly amongst the most powerful countries in the world when it comes to trade. Over the course of his presidency, Trump’s “America First” policy, however, has increasingly been undermining international trade laws. Over the past few years, the US president has been fighting numerous battles with some of America’s trading partners, using tariffs for leverage in negotiations. And although it may look like he’s done a lot, has this led to any progress? Let’s take a look at the main measures that Mr Trump has taken to protect American trade over the past four years.
The US vs. China trade war
The trade war with China which President Trump announced in 2018 is the most prominent trade conflict we’ve witnessed in recent years. The US President has been accusing China of unfair trading practices and intellectual property theft for years, whilst China has long believed that the US is attempting to curb its rise as an economic powerhouse.
The dispute has seen the two countries impose tariffs on hundreds of billions of dollars worth of one another's goods and although they recently signed a preliminary deal[1], some of the most complex issues remain unresolved and most of the tariffs are still in place. The US will maintain levies of up to 25% of approximately $360bn worth of Chinese products, whilst China is anticipated to keep tariffs on over $100bn of US goods.
United States-Mexico-Canada Agreement (USMCA)
Back in 2018, the US, Canada and Mexico signed a successor to The North American Free Trade Agreement (Nafta) which was renamed as the United States-Mexico-Canada Agreement or USMCA. The agreement governs over $1.1 trillion worth of trade between the three North American countries.
Renegotiating Nafta was one of Trump’s key goals for his presidency. "The terrible NAFTA will soon be gone. The USMCA will be fantastic for all!", he tweeted shortly after signing the new deal with America’s neighbouring countries.
However, despite the name change and the claims that the updated agreement would "change the trade landscape forever", a lot of the terms have remained the same[2]. Stronger labour provisions and tougher rules on the sourcing of auto parts were some of the most notable changes, however, analysts believe that their significance remains to be seen.
What’s more, a number of the other updates were discussed during negotiations which took place before Trump took office.
Tariffs on European cheese, wine & aircraft
There hasn’t been a trade deal agreed with the Europan Union as of yet. In 2018, after the US introduced tariffs of 25% on steel and 10% on aluminium imported into the country, the two sides went through a round of tit-for-tat tariffs with the EU announcing retaliatory tariffs on US goods such as bourbon whiskey, motorcycles and orange juice. A few months later, in October, the US imposed a new round of tariffs[3] on $7.5bn of EU goods, including French wine, Italian cheese and Scotch whisky. The US also imposed a 10% levy on EU-made airplanes which could hurt US airlines that have ordered billions of dollars of Airbus aircraft.
President Donald Trump has also repeatedly threatened to impose additional tariffs on European cars and although that hasn’t materialised yet, he has confirmed that he’s serious about it when he recently mentioned his plans again[4] during the World Economic Forum in Davos.
Trade deals with South Korea & Japan
One of Trump’s first moves as President of the US was to withdraw the country from the Trans-Pacific Partnership (TPP) – a proposed trade agreement between 12 countries, which eventually went ahead without America. Since then, Mr Trump has claimed two bilateral agreements with South Korea[5] and Japan[6]. However, the changes were so limited that Congressional researchers concluded that they barely qualified as trade deals.
With Japan, the US agreed on either levy cuts or full elimination on $7bn worth of agricultural goods, which is what it would have received under the Trans-Pacific Partnership too.
The most notable win that came from the agreement with South Korea is the extension of the 25% US tariffs against South Korean light-duty trucks to 2041. Previously, it was scheduled to expire in 2021.
Tariffs on steel and aluminium from Brazil and Argentina
In December last year, Mr Trump surprisingly announced on Twitter that he’s ‘restoring’ tariffs on steel and aluminium imports from Brazil and Argentina.
The two South American nations have been exempted from higher duty on both metals, but according to President Trump, both countries had been devaluating their currencies which he believes is ‘not good’ for American farmers.
There hasn’t been much progress since the initial announcement, but Brazil’s President Jair Bolsonaro said he had been assured by Trump that the tariffs won’t materialise.
[1] https://www.bbc.co.uk/news/business-51114425
[2] https://markets.businessinsider.com/news/stocks/us-canada-mexico-trade-deal-usmca-nafta-details-dairy-auto-dispute-resolution-2018-10-1027579947
[3] https://www.independent.co.uk/news/business/news/us-tariffs-trump-eu-goods-airbus-subsidies-wto-a9132001.html
[4] https://www.marketwatch.com/story/trump-doubles-down-on-threats-to-impose-tariffs-on-european-cars-at-davos-2020-01-21
[5] https://www.cnbc.com/2018/09/24/trump-signs-revised-trade-deal-with-south-korea.html
[6]https://www.bbc.co.uk/news/business-49834705
Gold now moves at its highest price since almost seven years ago, while global equities slid among recent political tension involving Iran and the US. The price of Gold shot up as much as 2.3% this week to $1,580 a troy ounce, its highest level since April 2013.
This subsequently boosted shares for manufacturing firms, as Newmont Goldcorp scaled 1.1% and Polyus International advanced 2.3%.
Natasha Kaneva, commodities analyst at JPMorgan, said: “Markets tend to overreact to geopolitics when trading is thin, as it has been during the post-holiday period, but investors are right to fret about what is happening in the Middle East.”
Aditya Pethe, director of Waman Hari Pethe, also remarked however that: “Demand could slow down because of the sudden jump in price, but once it stabilises, people will resume buying.”
Goldman analysts currently believe that Gold may in fact be a better bet than oil at the moment, but it all depends on what happens next in regard to the political situation between Iran and the US.
Nigel Green, the chief executive and founder of deVere Group, explains that as Tehran threatens “revenge” on the US over the killing of Qassem Soleimani, the commander of Iran’s elite Quds Force, who was in charge of the country’s regional security strategy.
It remains uncertain how, when, or if Iran will respond, but any retaliation is unlikely until after the end of three days of mourning.
Last week we saw the price of oil jump as a result of political tension. This week, Bitcoin, the world’s largest cryptocurrency by market capitalisation, jumped 5% as news of the strikes broke around the world on Friday. Simultaneously, the price of gold – known as the ultimate safe-haven asset - also moved higher.
We’ve seen Bitcoin price surges before during times of heightened geopolitical tensions. For instance, in August it jumped as global stocks were rocked by the devaluation of China’s yuan during the trade war with the US.
According to Nigel Green, this latest Bitcoin price increase underscores a mounting consensus that Bitcoin is becoming a flight-to-safety asset.
“Bitcoin is living up to its reputation as ‘digital gold’. Bitcoin - which shares gold’s characteristics of being a store of value and scarcity and of being perceived as being resistant to inflation – could potentially dethrone gold in the future as the world becomes increasingly digitalised.”
He continues: “With an escalation in geopolitical turbulence, which typically unsettles traditional markets, it can be expected that a growing number of investors will decide to increase their exposure to decentralised, non-sovereign, secure currencies, such as Bitcoin, to help protect them from the turmoil.
“The serious concerns created by geopolitical issues, such as the US - Iran issue will likely prompt an increasing number of institutional and retail investors to diversify their portfolios and hedge against those risks by investing in crypto assets.
"This will push the price of Bitcoin higher. In turn, due to the market influence of Bitcoin, other major digital currencies will receive a price boost.”
The deVere CEO concludes: “Bitcoin was one of the best-performing assets of 2019 and we can expect to see its investment appeal further strengthen as it becomes known as a safe-haven asset during periods of heightened geopolitical tensions.”
At least that is according to CompTIA, one of the world’s leading tech associations. Below, Jessie Dean of Oakmount Partners Ltd, an investment consultancy firm from the UK, discusses the complex tech-scape in the US.
True, San Francisco in California and the wider Silicon Valley area still provide the greatest number of vacancies and opportunities for Brits looking for career opportunities in the US, but it is North Carolina who CompTIA seems to think is serving expats with the best options. More specifically, the cities of Raleigh and Charlotte — both of which are part of the ‘Research Triangle Region’, an area known for its excellent tech and scholarly institutions.
Great plains instead of great beaches
California is the land of dreams. It’s everywhere, thanks to the success of Hollywood, in popular culture and imagination. Long stretches of golden coast; redwoods a thousand years old, and great cities packed with our favourite celebrities. North Carolina is different. If the average Brit was asked to conjure up images of North Carolina, it would probably represent something like a large red barn, isolated in an expanse of large overgrown agricultural fields.
So what is attracting the attention of CompTIA, and of British tech expats?
The shift back east is largely due to the quality of life that North Carolina can provide, and the greater disposable income that it provides.
True, San Francisco, Silicon Valley (that includes San Jose, Santa Clara, and Sunnyvale) still pay the best wages. The median salary for an IT worker in San Jose is over $122,000 per annum. But the cost of living in this area is a whopping 43 per cent higher than the national average.
The same IT worker might stand to make somewhere between $83,000 and $88,000 in the Research Triangle, but the cost of living in North Carolina is actually below the national US average — for now. What this means is, even with the pay cut, a job in North Carolina will land you more money in your pocket at the end of the month to spend on whatever you want.
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Big Tech and finance investment is soaring in North Carolina
The shift to North Carolina isn’t all about walking away with more money. Big Tech itself is investing in new areas, including IBM, Cisco Systems and even possible Amazon and Apple. There is also an increasing number of companies who are expanding their operations into North Carolina from the finance and consultancy sector. Including a number of big and increasingly digitised firms such as Wells Fargo, Accenture and Bank of America. The allure comes from tax breaks and other regional benefits — such as the wealth of talented students from the increasingly influential universities: powerhouses such as UNC Chapel Hill and Duke University. North Carolina is also a grand place to acquire local cost-conscious start-ups.
Is California’s time in the sun at an end?
San Francisco is one of the most expensive cities in the world. Living space is extremely limited — with the City located on a small peninsula out into San Francisco Bay. The local government won’t even build upwards, in the form of skyscrapers, as they do not want the views to be spoiled by the City’s less lofty residents. It is becoming hard to ignore that many of the positive factors about living in California — the weather, the good colleges — are now counting against it.
Then there is also the massive problem of homelessness. In some of the City’s poorer boroughs, such as Tenderloin, huge gangs of homeless openly inject with needles in broad daylight; take hallucinogens, and make some roads impassable at night. All of these factors, above and more may account for the fact that, according to CompTIA, more residents left San Francisco than any other city in the last quarter of 2017.
The current shift of power also has echoes in the not-too-distant past of America’s history. Boston was once a the ‘traditional tech centre’, and is now the 17th most desirable destination for tech expats, despite the City being within the commuter belt of Harvard, MIT, and other world-famous and prestigious institutions. A typical salary in tech for a Boston employee is a much lower $94,000 than in Silicon Valley, but the costs of living are still 35 per cent above the national average. Other ghosts of the past include Washington DC and Baltimore.
Though it is worth remembering that San Francisco still has plenty of vacancies for engineers willing to pay the high costs of living. So California’s role to play in tech is far from over. The balance will not shift overnight, and it was always inevitable that some other location would come to challenge it in time. For now, it is still wise for British expats to heed the old advice, to “Go west, young man”. Just not as far west as was typically expected.
The comments from Nigel Green, chief executive of deVere Group, come after China fuelled hopes that a deal can be reached to end its trade war with the US after agreeing with Washington to roll back on some tariffs.
The deal to reduce trade tensions could encourage the International Monetary Fund (IMF) to revise up global growth forecasts next year.
Mr Green notes: “There has been an argument that in regard to the trade war, China was holding out, playing the long game and waiting for President Trump to leave office, before dealing with another administration.
“Whilst this argument might have held water before, I now believe this is not the case – and it is what is fueling recent developments in the trade war negotiations.”
He continues: “It is likely that China is currently fueling hopes to reach a phased agreement in the trade dispute with the U.S. and cancel tariffs as soon as possible because it will help President Trump’s re-election.
“His re-election would suit them for two major reasons.
“First, because they will assume that reaching a deal with Trump to end the damaging trade war will probably be easier than with some others. These include Elizabeth Warren, the potential Democratic rival, who could, say many supporters, win next year’s presidential election.
“Ms Warren can be expected to be even tougher with China than Trump, and not only on trade, but on other difficult issues, including climate change and human and labor rights.
“And second, despite the trade war, Trump’s policies and rhetoric have proven to be strategically helpful to China in achieving its longer-term goals.
“In many respects, President Trump has undermined Washington’s global credibility, international governance bodies and key alliances, and has been indifferent if not antagonistic towards major trading agreements.
“This all compromises America’s standing as the world’s primary superpower and it provides China with openings and opportunities it has previously never had in terms of global influence and setting international trade conventions.”
The deVere CEO concludes: “The positive signs coming from Beijing and Washington on the trade talks between the world’s two largest economies have been welcomed by stock markets – some reaching all-time highs this week.
“Investors’ exuberance will grow further still should the deal be cemented, and also should Trump be re-elected.
“However, US investors should perhaps also question whether Mr Trump’s administration has, in fact, handed China a great strategic opportunity that could damage America’s preeminent superpower status in the longer-term and, therefore, its economic dominance.”
