The Biggest Risks for U.S. Equity Investors
Diverging growth in the global economy tops the list; Turkey is at the bottom.
The U.S. could be insulated from the currency crisis.
Photographer: Diego Cupolo/NurPhoto via Getty Images
In recent weeks, U.S. stock markets have moved up and down in response to issues that go well beyond the traditional direct drivers of economic growth and corporate earnings. These “known unknowns,” to borrow a phrase from former Defense Secretary Donald Rumsfeld, include the aftermath of the currency crisis in Turkey, the trade tariffs and sanctions skirmishes, the more uncertain outlook for the global economy, and the exit from unconventional monetary policy.
The moves in U.S. asset prices, whether up or down, have often appeared exaggerated when assessed calmly in light of the longer-term influences of these factors. (The issue is different for other technically fragile asset classes such as emerging markets, or for directly impacted countries such as Turkey.)