The Housing Bubble

Sounds quite exciting for you on a personal level, anyway…Good luck!

“No response” is a bad sign. So you believe that your new manager kept you on only because he was saving you for the China trip?

IT is turning into migrant freelancing.

Do factory workers usually think about banks?

rich people make money off their assets while poor people punch a time clock for the rich people who have a large pool of unemployed to choose from.

Is any of this new found wealth from asset manipulation going to find its way down to the person punchn the time clock?

And here’s the proof:

Shifts among homeowner rates by profession lowest in what profession?

http://www.marketwatch.com/story/only-two-professions-own-more-homes-post-recession-2014-01-27

GLOBAL MARKETS-Emerging sell-off hits European shares, lifts yen
By Natsuko Waki
LONDON Mon Jan 27, 2014 2:40pm IST

Jan 27 (Reuters) - Emerging markets led a global sell-off in risky assets on Monday as European stocks followed sharp falls in Asia and safe-haven assets such as the yen and gold rallied.

Concerns about China’s economic slowdown and its shadow banking sector, coupled with expectations the Federal Reserve would scale back its bond buying further, are piling pressure on emerging markets dependent on external financing.

Political risks in Ukraine, Turkey and Thailand as well as a looming financial crisis in Argentina are compounding the problem of emerging markets in a week when the Fed is expected to cut its monthly bond purchases by another $10 billion.

In Europe, a German media report which cited an OECD study that showed European banks have a combined capital shortfall of about 84 billion euros also hit sentiment.

“Sudden fears about emerging markets and also potential capital shortfalls for some European banks are rattling investors. People have been a bit complacent lately, so it’s quite logical to get a correction,” said David Thebault, head of quantitative sales trading, at Global Equities.

MSCI world equity index fell 0.6 percent, its lowest in more than a month, following Asia’s decline of 1.6 percent.

The benchmark emerging stock index hit a 4-1/2 month trough, falling 1.6 percent on the day. Emerging stocks are the worst performing asset so far this year, with year-to-date losses of 5.2 percent.

U.S. stock futures are pointing to a firmer open, after the S&P 500 index posted its worst week since June 2012 last week.

European stocks are down 0.6 percent. Banking stocks lost more than half a percent.

“There’s a sea of red in Asia and that spills over into Europe and should give some support to safe-haven assets,” said Nick Stamenkovic, bond strategist at RIA Capital Markets.
…

Is it still 2013 in China?

January 27, 2014, 4:43 a.m. ET
Global Selloff Turns to Asia — 2nd Update
By Daniel Inman

Investors are souring on China as warning signals pile up on the world’s second-biggest economy, spurring a broad plunge in markets across Asia Monday and adding to a global selloff.

Japan was hit especially hard, with the Nikkei slumping 2.5% to its lowest level in two months and taking its losses to 7.9% this year as a rising yen hurt the outlook for exporters. The largest moves in 2013 though are in the widely-traded Hang Seng China Enterprises Index which tracks Chinese companies listed in Hong Kong, down 9.5% this year as fears rise over Beijing’s slowing and debt-laden economy.

The sharp turnaround in sentiment toward China brings to an end the optimism seen in the final few months of last year following the government’s reform blueprint announced in November. Global money managers are now fretting over how safe the country’s unregulated shadow-banking sector is and how slow its economy is growing, adding to worries elsewhere in developing markets from Argentina to Turkey.

“The main thing we need to think about is China. Is money going to flow out because everyone is thinking China is going to slow down?” said Kevin Foy, director, global head of sales in Singapore trading at Maybank Kim Eng, the brokerage arm of Malaysia’s largest bank by assets.

Some hope emerged Monday when an agreement was reached to help resolve a troubled investment product that is being closely watched for signs of weakness in China’s shadow banking sector. China Credit Trust Co. said it would restructure the loan behind a 3 billion yuan ($496 million) product, potentially alleviating the chances of a default that could have rippled through the financial system.

But the move did little to bolster the country’s financial markets, which have had a rough start to the year. In the last two weeks, short-term borrowing costs spiked higher as banks hoarded cash before the Lunar New Year holiday, sparking fears of a liquidity crunch. Meanwhile, a report Thursday showed that conditions in the manufacturing sector had deteriorated, exacerbating worries about how the global economy will fare as the U.S. pulls back from aggressive monetary easing.

Those worries have added to problems in a wide range of other developing countries and fueled the broad selloff that started in emerging markets and has now spread to more developed markets including the U.S. and Japan. The selling has also been fueled by uncertainty over how soon the bond-buying program will be scaled back by the Federal Reserve, which meets Tuesday and Wednesday.

“A number of issues have all come together,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital in Sydney. Problems “have been bubbling away for a while now, but when they hit the screen at the same time, it appears like there is a problem in emerging markets.”
…

Asia, Europe Stocks Sink on Global Economy Fears
HONG KONG January 27, 2014 (AP)
By KELVIN CHAN AP Business Writer
Associated Press

Asian and European stock markets were pummeled Monday by the possibility of slowing growth in China and a further reduction in U.S. central bank stimulus.

Asian stocks ended sharply lower as investors sought out havens such as the Japanese yen, which strengthened to a seven week high against the dollar, and gold, which was at its highest in more than two months. Japan’s Nikkei briefly dipped below 15,000 for the first time since mid-November.

In early European trading, the FTSE 100 index of leading British companies dropped 1 percent to 6,600.26 while Germany’s DAX dropped 0.5 percent to 9,342.80. France’s CAC 40 fell 0.4 percent to 4,142.70. U.S. stocks were poised for a small rebound after tumbling last week. Dow futures edged up 0.1 percent to 15,836.00. Broader S&P 500 futures climbed 0.3 percent to 1,788.40 .

Investors were awaiting a two-day meeting of the U.S. Federal Reserve starting Tuesday, where officials are expected to reduce the central bank’s monthly bond buying by another $10 billion to $65 billion. Recent signs of a sustained recovery in the world’s biggest economy will play a big role in the decision by Fed officials to scale back stimulus for a second time.

Stock prices in emerging markets have been propped up for years by investors seeking higher returns using a tide of so-called “easy money” from the Fed and other central banks. But now that the end for those policies looks to be near, some investors are fleeing stocks. The capital flight has slammed some places particularly hard, such as Argentina, where the peso dropped 16 percent against the dollar over two days last week.

“The growing turmoil in emerging markets is inflicting damage on risk assets across the board and no letup is expected in the near term,” said Mitul Kotecha, head of global markets research for Asia at Credit Agricole CIB, in a report.

The global sell-off was triggered by the preliminary results Thursday of a survey showing that China’s massive manufacturing industry would contract in January for the first time in six months, the latest sign that a painful slowdown in the world’s No. 2 economy is likely to continue.

“We’ve seen brief slowdowns in China before,” said Michael Every, head of financial markets research for Asia-Pacific at Rabobank. “The difference is we don’t expect to see rapid acceleration again this time, because they’re trying to clamp down on credit growth to prevent nonperforming loans going even higher than they are.”

Investors are more sensitive to turmoil in emerging markets such as China because they’re playing an increasingly large role in the world economy. Emerging and developing economies account for nearly 40 percent of the global economy, up from 18 percent two decades ago, with China’s share zipping to 14 percent from 4 percent, according to Societe-Generale.

Japan’s Nikkei 225 nosedived 2.5 percent to close at 15,005.73. The yen has strengthened significantly in the past few days, which is negative for export stocks.

Hong Kong’s Hang Seng lost 2.1 percent to 21,976.10 and Seoul’s Kospi dropped 1.6 percent to 1,910.34. In mainland China, the Shanghai Composite Index dropped 1 percent to 2,033.30. Benchmarks in Taiwan, Singapore, Philippines, Indonesia and New Zealand also slipped.
…

ASIA CREDIT CLOSE: Asian equities, credits sink on safe-haven flight
Mon Jan 27, 2014 2:23pm IST

SINGAPORE, Jan 27 (IFR) - There was a sea of red in both the equity and credit markets in Asia as investors sold off risky assets for safe-haven bids.

Stocks in Japan closed more than 2% lower, while those in China, Hong Kong and Singapore were trading more than 1% down.

The iTraxx Asia IG Index was about 2bp wider, recovering a touch from a 3bp widening in the morning. Indonesia’s 5-year CDS pushed out 5bp and the Philippines CDS were 3bp wider.

The cash bonds of the two sovereigns were also not faring well. Indonesia’s 2024s slumped to 101.40/101.70 from above 103 in the middle of last week, while the 2044s were at 99.70/100 from 102.5 last Wednesday.

The Philippines’ new 2024s were only slightly lower at 101.00/101.50, versus 102.00, but will face pressure if risk sentiment continues to deteriorate.

Investors continued to fret about the economic slowdown in China and an increased cutback in the US Federal Reserve’s accommodative policy. This comes at a time when a heavy issuance volume in the Asian US dollar market in January is again weighing on the markets.

Year to date, some USD19.5bn of bonds have been sold, just short of the USD22.6bn record issuance in January 2013. Last week alone, nine deals of a combined USD3.1bn were printed and one that broke the camel’s back was Wanda Properties’ 10-year issue, which priced 455bp over US Treasuries.
…

5:29 am Jan 27, 2014
Asia
Are Emerging Markets Set to Get Even Uglier?
By Ben Edwards

A brutal selloff in emerging markets across the globe last week has renewed concerns about the impact the U.S. Federal Reserve’s withdrawal of monetary stimulus is going to have on the world’s developing economies. Here’s a quick rundown of how investors and analysts are reacting to the turmoil:

Kit Juckes, macro-strategist, Societe Generale

Despite the emerging-market turmoil, the Federal Reserve will likely press ahead with plans this week to reduce the pace of its bond-buying program by another $10 billion a month, reckons Mr. Juckes. That won’t ease market tensions though, he says. For one, the current period of market turmoil has been exacerbated by regional flare-ups, such as political strains in Turkey and Argentina. “There are too many fires burning to expect them to all blow out simultaneously,” he said. “”In equities, credit and across much of EM the message is simple – the storm is very definitely not over.”

Lee Hardman, currency analyst, Bank of Tokyo-Mitsubishi UFJ

Last week’s selloff is making investors more risk averse, with a flight to quality causing U.S. Treasury yields to decline, Mr. Hardman says. The tapering of the Fed’s bond-buying program is serving to further reinforce investor jitters about countries such as Turkey and South Africa that have elevated current account deficits, he said. “We still expect the Fed to announce that it will taper quantitative easing by a further $10 billion in the week ahead as economic conditions in the U.S. have not diverged significantly from their expectations,” he said.
…

U.S. investors should have little to fear, as we have decoupling. Plus the flight-to-quality into U.S. Treasury bond purchases pushes down U.S. interest and mortgage rates. So go out and borrow money at super low rates in order to heavily load your portfolio with U.S. houses and stocks, resting assured that the U.S. stock and real estate markets are destined to keep always going up in 2014.

Who moved my BRICs?

Here’s your emerging markets cheat sheet
January 24, 2014, 2:00 PM

As emerging markets from Argentina to Turkey to South Africa tumble, Neil Shearing at Capital Economics is stressing that investors shouldn’t lump them all together. These countries, he says, are no longer as homogenous as they were even just a decade ago.

Here’s how he breaks them down into five groups (though the labels come from MarketWatch):

Serial bad boys, or countries where what he calls “serial mismanagement by the authorities” is now a risk to economic stability. Poster children include Argentina, Ukraine and Venezuela. On Friday, stocks in Argentina slid amid fears of a financial crisis there following a devaluation of the currency and the easing of restrictions on dollar purchases.
The spendthrifts. These countries have been living beyond their means and are most vulnerable to the end of easy-money policies by the Fed and other central banks. Take a bow, Turkey, South Africa, Chile, Peru and parts of South East Asia.
Oh my aching head: These are countries that he says still have a hangover from the last boom. These are mainly in Emerging Europe, Capital Economics says. Hungary and Romania stand out. As a group, the risk is that the euro zone’s financial problems could flare up again and spill eastward.
Homeboys, or countries with domestic structural problems. This is the biggest group and begins with the BRICs – Brazil, Russia, India and China. The story there is more domestic, rather than what happens in Europe or with the Fed. Worries about a slowdown in Chinese growth after a surprise contraction in factory output there kicked off the latest emerging-market selloff. Also read: Craig Stephen on the pain is beginning in China.
The strivers. The outlook is brightening in these good-news countries. Hello, Korea, which will benefit from better economic conditions in key export markets. There’s the Philippines, which should see the benefit of economic reforms, and Mexico (a two-fer).
…

Jan. 26, 2014, 10:44 p.m. EST
Taper threatens Hong Kong property
By Craig Stephen

HONG KONG (MarketWatch) — You might not expect the Argentine peso to have much in common with Hong Kong property, but they both could be casualties of tightening by the U.S. Federal Reserve.
Enlarge Image

Last week’s plunge in the peso USDARS +0.85% has been a sharp reminder of the risks of Fed tapering, and it has renewed fears that Hong Kong’s bubbly property market could soon be tipped over.

This means Hong Kong will be watching particularly closely when the Fed issues its latest policy statement later this week. A continuation of tapering (reduced bond buying) could jolt both local property and equity markets. Despite the influx of mainland Chinese listings in recent years, property stocks still represent a quarter of the Hong Kong equity market, as judged by the market value of the MSCI Investable Universe Hong Kong Index.

The reason Hong Kong property is singled out as a potential taper causality is due to the extent it has gained from quantitative easing in the U.S. The longstanding currency peg to the U.S. dollar means Hong Kong has had to import the ultra-loose U.S. monetary policy, which has left the territory awash with cheap money.

It was during this period of successive Fed QE that Hong Kong banks introduced rock-bottom mortgages based on interbank rates, which helped propel property prices to record highs. Since 2007, property price have increased over 100% despite a succession of measures by the Hong Kong government to tame the market, including heavy transaction taxes for non-residents.

Now analysts warn that a policy shift by the U.S. Fed can do what seemed beyond the power of Hong Kong’s government: it can reverse property prices.
…

Gordon G. Chang, Contributor
I write primarily on China, Asia, and nuclear proliferation.
Op/Ed | 1/05/2014 @ 4:20PM |12,467 views
Your Best Investment In China In 2014

Chinese residential property prices continued their relentless climb in December. The China Real Estate Index System (CREIS) reports that the average price of new homes in 100 cities jumped 0.7% from November, the 19th straight monthly increase. In November, the comparable figure was just about the same, 0.68%.

CREIS also reports prices increased 11.5% in December over the same month in 2012, the biggest year-on-year improvement since August 2011.

These month-on-month and year-on-year figures roughly track those from other surveys. Residential property ended 2013 as the winner in China. Forget stocks, trust investments, or bonds. The best place to be in China last year was in homes.

How can that be when the country is littered, from one end to the other, with “ghost cities”? The oversupply of residential units can only be described as horrendous. There was, according to Liu Yuanchun of People’s University, 1.46 billion square meters of housing unsold at the end of September, equivalent to 10 months’ sales.

There is no indication the situation has improved since then. Capital Economics, for instance, estimates that there are now more than 3 million unsold units held by listed developers, a million units more than their inventory two years ago. That’s an all-time record.

In a normal economy, an overhang of this sort would depress prices, but in China many developers do not have to dump units because they are not allowed to go bankrupt. Cities have informal quotas for business failures, so the country now has zombie developers, dead but still walking.

Yet the general aversion to bankruptcy is only one factor why residential property keeps soaring. The most important reason is that there is too much money in China and as long as the central government maintains an ultra loose monetary policy, the Chinese people will continue to buy apartments as their best inflation hedge.
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Market Pulse Archives
Jan. 26, 2014, 7:47 p.m. EST
China halts transfers at Citi, other banks: report
By Michael Kitchen

LOS ANGELES (MarketWatch) — Citigroup Inc.’s C -2.74% China branches, and possibly other banks, have stopped all cash transfers for three days and all currency conversions from yuan for nine days, Forbes reported Sunday via an article by contributor Gordon Chang. Citi reportedly made the announcement in a notice on its web portal for Chinese customers, saying the move was a result of “system maintenance of People’s Bank of China,” a reason Forbes’s Chang described as “preposterous.” MarketWatch couldn’t immediately confirm the report. Chang said the move was similar to action taken in June and December of last year. “In June, for instance, the central bank used the excuse of a ’system upgrade’ to allow banks to shut down their ATMs and online banking platforms. As a result, they conserved cash and thereby avoided a nationwide meltdown,” Chang wrote.

Jan. 27, 2014, 6:35 a.m. EST
Emerging-market currencies drop again
Turkish lira and South African rand take hit
By Katie Martin and Peter Nurse

The start of a fresh week offered no reprieve in the shakeouts for key emerging-markets currencies Monday, with the Turkish lira extending its record-breaking slide, South Africa’s rand wilting further and other markets caught in the rush to safety.

A mix of local emerging-market strains, nerves over the fallout from the U.S. Federal Reserve’s plans to reel in monetary stimulus and patches of weak economic data from China have caused investors to pull back from riskier bets in recent trading days. On Friday, that morphed from localized selloffs to a broad flight to safety — a pattern that is now persisting.

Markets in Asia fall sharply on fears over China’s growth and uncertainty about the impact of the Fed’s tapering on emerging markets. The WSJ’s Jake Lee tells us why things may get worse in Asian markets.

“It started as a set of issues around individual countries and currencies, and then it became ‘sell everything that is not G-10,’“ said Daragh Maher, a currencies analyst at HSBC in London.

“Opinion is split over whether that will continue. The Polish zloty is now a good one to watch as a reference point. This is a liquid market with good fundamentals. If it gets sold off, it is because investors are taking a wider disdain to emerging markets.”
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Top Trades in Disarray Amidst Emerging-Market Rout: Currencies
By Ye Xie, Anchalee Worrachate and John Detrixhe
Jan 27, 2014 12:08 AM PT

It’s less than a month into 2014 and already currency strategists are seeing their top trade recommendations for the year upended by the rout in emerging markets.

Buying Mexico’s peso versus the yen has lost about 1 percent since Bank of America Corp. named the trade one of its top picks in November, with a targeted return of 9.4 percent. Danske Bank A/S exited a trade this month buying Turkey’s lira versus Denmark’s krone at a loss of 2.9 percent. Of 31 major emerging-market currencies, 13 have already weakened beyond their median year-end forecasts in Bloomberg analyst surveys.

“Traders either made their year or lost their jobs in the last week,” Douglas Borthwick, the head of foreign exchange at Chapdelaine & Co. in New York, said by phone Jan. 24.
…

Emerging market rout hits Asian currencies
SINGAPORE Mon Jan 27, 2014 1:51pm IST
Malaysian ringgit bank notes of different denominations are seen in this picture illustration taken in Kuala Lumpur August 20, 2013. REUTERS/Bazuki Muhammad/Files

(Reuters) - Most emerging Asian currencies tumbled on Monday as a global sell-off of riskier assets intensified, pulling the Malaysian ringgit and the Philippine peso to their lowest levels in more than three years.

Financial turmoil in Argentina, fears of a sharper slowdown in China and expectations that the U.S. Federal Reserve will continue to trim its bond-buying programme later this week have sparked a broad bout of risk aversion and a flight to safer assets such as the yen.

The Indonesian rupiah led slides in Asian currencies, shedding 0.4 percent against the dollar, as it is seen more vulnerable to the Fed tapering than other Asian currencies because of the country’s current account deficit.

The rupiah has eased 0.5 percent so far this year, outpacing most of its regional peers, according to Thomson Reuters data.

The ringgit fell as much as 0.4 percent to 3.3455 per dollar, its lowest since May 2010, pressured by selling by offshore funds, including real money accounts, traders said.

The peso lost up to 0.3 percent to 45.45, its weakest since August 2010 amid market talk of selling from real money funds, traders said.

South Korea’s won slid as much as 0.7 percent to 1,087.7, its weakest since September 13, as offshore funds such as model accounts unloaded the currency.

Foreign investors dumped a net 514.6 billion won worth of stocks in Seoul’s main exchange, the largest daily selling since December 12, according to the Korea Exchange data.
…

Emerging Stocks Sink to Four-Month Low as Currencies Extend Drop
By Harry Suhartono and Lilian Karunungan
Jan 27, 2014 12:49 AM PT

Emerging-market stocks fell to the lowest level in more than four months and currencies weakened amid concern that slower Chinese growth and reduced Federal Reserve stimulus will spark more capital outflows.

The MSCI Emerging Markets Index dropped 1.5 percent to 935.81 as of 4:06 p.m. in Hong Kong, heading for the lowest close since Sept. 3. A Chinese measure in Hong Kong and equity gauges in Indonesia and the Philippines tumbled at least 1.8 percent, while the rupiah slumped for a sixth day versus the dollar and Turkey’s lira slid to a record. The cost of insuring Asian debt rose to the highest level in almost four months.

The combination of weaker Chinese manufacturing, political turmoil from Turkey to Thailand and the devaluation of Argentina’s peso has shaken investor confidence at a time when the Fed is scaling back the bond-buying program that had fueled inflows into emerging markets. Foreign investors pulled about $481 million from South Korean shares and $566 million from Taiwanese equities today, while trading volumes in Kuala Lumpur surged to 101 percent above their 30-day average.

“The growing turmoil in emerging markets is inflicting damage on risk assets across the board and no let up is expected in the near term,” Mitul Kotecha, the global head of foreign-exchange strategy at Credit Agricole Corporate & Investment Bank SA in Hong Kong, said in an e-mail.
…

Business Standard
Scope for further fall in emerging markets currencies
(Comment, Special to IANS)
IANS
January 27, 2014 Last Updated at 11:14 IST

Investors looking to bottom-fish and find value in the emerging markets currency basket space will do well by telling themselves: What’s cheap can get cheaper. Last week, the foreign exchange markets witnessed a sharp sell-off in the emerging markets currency space over concerns of the future policy path of the US Federal Reserve and disappointing Chinese economic data.

The last couple of quarters have witnessed a massive outflow of funds from emerging markets (EM) currencies into (developed markets) DM currencies as economic growth in the developed world reverts back to pre-crisis levels. The South African rand, the Brazilian real, the Turkish lira and the Mexican peso all depreciated more than two percent against the US dollar last week.

Historical price levels were reached last week with the lira plunging to a record low. The rand also dropped to its lowest level in five years while the real fell to a six- month low. The hardest hit was the Argentine peso, which witnessed its largest intra-day fall last week and has given up about 18 percent of its value this year.

Foreign exchange reserves of many of these nations are running out at an alarming speed due to an effort to shore up their currencies. Turkey, for example, last week spent in excess of $3 billion to provide support to its dwindling currency. But its reserves stand at a mere $33 billion now, and clearly this intervention in the fx market cannot continue.

Currency strategists are expecting another leg down in the EM currency space to the extent of 5-10 percent. The price action in the EM currencies has also impacted major DM currency pairs such as the dollar/yen, pound/dollar and the aussie/dollar. Risk aversion and an inflow of money into the US dollar, which is viewed as a safe haven currency usually leads to a sell off in these pairs.

It is important to note here that Australia wants its dollar to be trading close to 0.85 to the US dollar, while Japan via its own quantitative easing measures is attempting to further weaken the Yen driving it past the 105 level. But the momentum to the downside in the Australian dollar may drive it past the 0.85 level in the coming weeks and the Yen can further strength against the dollar.

Thus, although it is a very low probability scenario, if the sell off in the emerging currency market does not abate, we may see some foreign exchange intervention from the Australian and the Japanese central banks.
…
Emerging market countries worst hit by their depreciating currencies will have to address domestic structural problems to prevent future speculative attacks which take their currencies to massively oversold levels.

Lessons can be taken from India in this respect, which via various measures has managed to the stabilize the slide in the Rupee over the last six months. The Indian Rupee has largely outperformed its peer EM currencies this year.

The ideal trading strategy to deploy for the EM currency space for now is a wait and watch game. With such enormous selling pressure and liquidation out of EM currencies, picking a bottom at this point of time would be like catching a falling knife.

(Vatsal Srivastava is a senior market analyst. The views expressed are personal. He can be contacted at vatsal.sriv@gmail.com)

The Economist
Emerging markets
It’s like 1997 all over again
Jan 27th 2014, 9:21 by P.F. | MUMBAI

“THE peso has gone to hell,” worried the Nobel-Prize winning writer V.S. Naipaul in an essay from the 1990s about Argentina. He also touched on Eva Perón’s sexual technique, beefsteak, class tensions in Buenos Aires and Jorge Luis Borges. Its limp currency is an elemental part of that South American country. And yet the news last week—that the partially pegged peso had dropped by 15%—has scared global investors.

At Davos, a gabfest for the world’s biggest egos, the talk turned from Jamie Dimon’s enormous pay packet to worries about an emerging-markets crisis. Currencies in the developing world fell to their lowest level since 2009. Along with Argentina, so Turkey, South Africa and Russia have been hit hard. There is violence on the streets of Kiev and Bangkok. The scare dragged down the S&P500 by 2% on Friday, January 24th. Then Monday morning the Asian bourses fell.

Emerging countries have already had a recent walk on the wild side: from May to August 2013, after the Federal Reserve made its first, botched, attempt to start winding down its bond purchases. At the prospect of an end to free money, funds were pulled from emerging countries that have benefited from a decade of easy inflows, and currencies and stockmarkets tanked. During the last few months of the year however things seemed to have stabilised.

Crises have a habit of coming in fits and starts, though, rather than in one big bang. For instance Thailand ran into trouble in July 1997. Four months later South Korea’s president warned his countrymen of the “bone-carving” pain to follow an IMF bail-out. It took over a year for Russia to blow up; its default didn’t happen until August 1998. The last mini-crisis took time to come to a head, too. After Argentina devalued and defaulted in 2001, many argued it was a cranky special case. But by mid-2002 the contagion had taken Brazil to the brink.

Since the sell-off of 2013, doom-mongers may argue, two things have got worse. First it has become even clearer that the rich world’s central bankers do not have much of a clue how to tame the beast they have created in the form of ultra-loose monetary policy. Ben Bernanke, the outgoing Fed chief, chairs his last policy meeting on January 28th and 29th. The Fed is expected to trim its bond purchases by a further $10 billion, to $65 billion a month. No doubt this will be accompanied by a torrent of elegant verbiage to show that the Fed is in command. But sceptics should look at Britain, where the newish central bank boss, Mark Carney, has abandoned the framework he put in place only half a year ago. It was supposed to govern the pace at which monetary policy would return to an even keel. The process of normalising central banks’ balance-sheets is going to be mighty unpredictable and disruptive.

The second change for the worse is that the emerging world’s recovery in exports looks tepid. The hope had been that as the Western world grew faster it would suck in more goods from emerging economies, helping them to improve their current-account balances and making them less dependent on foreign capital inflows.
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DIFFERENT STROKES
A global tour of the emerging-markets currency crunch
By Tim Fernholz @timfernholz January 26, 2014
The “Asian contagion” of 1997-98 sent the value of Indonesia’s rupiah tumbling. AP Photo/Charles Dharapak

The big markets news at the end of last week was the plunge of Argentina’s peso. The sell-off came as many other emerging-market currencies were already sliding:

Emerging-market currencies chart

What’s driving these trends is the intersection of the US Federal Reserve’s decision to slow its bond-buying stimulus—the so-called “taper,” which has been fueling a sell-off in emerging markets since early last summer—with a variety of more local problems, ranging from troubled economic institutions to political unrest and bad economic data in China. But a smart note from London’s Capital Economics, highlighted by the FT’s Izabella Kaminska, provides a helpful taxonomy of what different emerging economies are going through and, more importantly, whether one country’s problems could prove contagious to others, as happened during the currency crises of the 1990s. We’ve broken it down with the following maps.
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No, but nothing goes straight down or up.

SELL! SELL! SELL!!!

BUY! BUY BUY!!!

Stock Sell-Off Continues in Markets
By DAVID JOLLY and BETTINA WASSENER
JAN. 26, 2014

BRUSSELS — Global stocks picked up Monday where they left off last week, with key indexes falling from Tokyo to London and emerging markets losing more ground amid fears of capital flight.

Markets slumped across the Asia-Pacific region, with the Japanese benchmark Nikkei 225 dropping 2.5 percent to its lowest close since November.

Selling in Europe was more restrained, with the Euro Stoxx 50 index of blue-chip companies in the euro zone barely down in morning trading. But the London benchmark FTSE 100 index slid as Vodafone Group shares tumbled 7 percent after AT&T announced that it would not make an offer for the British cellphone giant.

“We’re clearly favoring the developed world over emerging markets at the moment,” Philippe Gijsels, the head of research at BNP Paribas Fortis Global Markets, said. Investors had become cautious amid signs that some countries, including India, South Africa and Turkey were having trouble.

“But what’s basically happening is that markets were overbought and they’re looking for an excuse to sell,” Mr. Gijsels said. “I don’t think this changes the overall story, I think this will probably create an opportunity to buy.”
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Dumb question of the day:

With all the emerging markets turmoil and flight-to-quality into U.S. Treasury bonds, is the narrative about rising U.S. interest rates due to the Fed taper pretty much dead in the water?

Yes. Emerging markets have recovered. Today’s boogey man is “tech”. I guess the invcibility of fiberoptic cables has been breached now, so tech is down the tubes. I’m just surprised that a graduate of a vocational high school didn’t figure out how to breach a fiberoptic cable before the NSA did it a few years ago. Imagine how much money someone could have made off it. Especially considering that there is no way to detect aberrations in the amount of light traveling down a tube.

“Saw that in 2012 — the big bubble never totally deflated.”

Saw what in 2012?

the cr@ppiest paper they can find I’m sure.

Oxide:

- The Fed is lending against the junk MBS that couldn’t be sold on the free market.

- You live in a place that got targeted by the losery institutional investors. When they are forced to sell, many residences in your city will sell at auction to true all-cash buyers for a third of peak pricing.

“Sometimes I feel like we’re wasting money,” she said.

You are wasting money. ALOT of money.

Wasting money in rent or too big a house - tough decision….

“You better believe it. Renting is always better. Always.”

It’s certainly cheaper. Like 50% cheaper.

Bummer, that means over the next twenty years we are going to see more extreme weather. Bring back our sunspots!!

Fellini was a visionary.

It will be interesting to see the divorce rate of the “in your face” marriages…

“If you are against the fastest-growing voting bloc in the country, you and your party don’t have a future,” Bloomberg also said.

The fastest growing voting bloc in the country is lucky ducky thanks in large part to illegal immigration.

“saying that the GOP also will not have a future if it does not embrace more amnesty.”

Shamnasty would actually ensure the GOP’s death and burial. I’ve informed my rep’s office that if they do anything, and I mean ANYTHING that even begins to approach amnesty, I will never, EVER vote for a member of their party again, and I’ll mention my rep’s name why I won’t when solicited for votes or donations or whatever.

The only hope the GOP even has is to come out against amnesty, and for secure borders and attrition internally in the US.

“If you are against the fastest-growing voting bloc in the country, you and your party don’t have a future,” Bloomberg also said.

Voting bloc for the democratic party, that is. That’s the reason many in GOP oppose it, right? If they would vote even a 40/60 for the republicans, they would have been citizens long time ago.

As Chucky Cheese Schummer said, you are a racis if you don’t belive in immigration. As for me I am glad I am not a racis because I do support amnesty but not voting rights.

interpretation

Our elites need slave labor and to suppress wages.

Illegal immigrants can’t vote, Bloomie.

““If you are against the fastest-growing voting bloc in the country, you and your party don’t have a future,” Bloomberg also said.”

Yeah, let’s keep importing more fish to be hooked by fascists like Bloomberg. We’ll be finished in no time.

I wonder if these billionaires would be so hell bent on “immigration reform” if they were struggling to make it working low-wage jobs as an average American?

Newsmax dot com are not real journalists.

Maybe y’all should wait for the investigation to unfurl before you go accusing D’Souza of being innocent.

FIFTY THREE.

I’m thinking the Fed meeting later this week will offer more foot dragging on the taper, out of fears the fragile recovery will be upended if they act too quickly. This in turn will help prolong the period the global economy teeters on the edge of collapse, which coincidentally is the very same period that long-term Treasurys pay super-low yields.

Downlow Joe has entered the building.

19% of the US Budget goes toward the military

56% of the US Budget goes toward entitlements

Look at this info graphic which depicts just one example of how much more the US spends for each vote of the free sh*t army. This graphic is for monthly “crazy check” but if you surf around you can find others.

70% of the world is covered by water, 80% of al people live near water, 90% of all trade travels by water. Your Navy 100% on watch !!

Americas Navy….”A Global Force For Good”….

I’m wondering if there is a way to “unintall” anything and everything related to Google, as it seems as though they have larded up my system with all kinds of extra steps to open any web site.

Here is my computer mistery

Came home computer in my locked office was on with yellow power light. Couldn’t get the computer to boot up. Took it to my computer help desk at work. They said it was a loose RAM chip. They reseated it and ran some updates and told me I could pick it up later in the day. When I got home and opened the computer all my files were missing music, work, pictures etc. I called the help desk and they say they didn’t move or delete a thing. They had scanned the computer for viruses and found none. The short cut to my file is still there but when you click on it it says something like the F drive is not available. I don’t have an F drive so I think someone stole the information. Now I’m left wondering who for what purpose. Serious ulcer.

I have noticed some more aggressive pop-up advertising. Startling even, virus-esque. Like browsing a website and a new tab on my browser opened with a link to a malware site. I scanned my computer completely with a reputable, updated virus scanner and it came up clean. Another site did the same thing.

I haven’t seen the whole new-tab-opening-and-getting-the-focus thing before. That gives me some concern, but in my experience, while virus scanners cannot clean off installed advanced viruses (computer needs to be reset to factory defaults or reformatted), they can at least tell you something is there.

“So, I’ll probably keep you guys and gals up to date”

I was going to say I think you may have just insulted some part of the LGBT community but I decided not to, because that would be considered, well it would be considered something.

Why wouldn’t you RENT in a decent but not expensive area, then stack up cash and buy once a) interest rates rise b) prices fall? Then you can ball out of control.

I guess my point is, there is _no way_ prices are sustainable in inland CA. I’m sure you realize this.

Health & many days of enjoyment in your new home Captain…

The rent on your new rental in the IE is going to be very cheap. If you’re going to stay in the IE, then you will surely buy a house with cash for 33-50% off in a year or two.

Enjoy your life as runway foam!

How much do you enjoy breathing, Cap’n? Smog sink, dust storms, no water when the CO river allotment runs out, rednecks, low-riders, Mexican gangs, corrupt/bankrupt municipal/county government, Allergy Central. First to go under in a crash, last to recover. It was a marginally okay place to live when it was growing dates and oranges — but they cut them all down two generations ago.

You’re waaaay too smart for this.

The Washington Times are not real journalists.

It is not tyranny and oppression if we target conservatives

This is getting confusing. I thought that names of political donors were already public record.

I’m sure our Injustice Department will get to the bottom of this.

Kick off at 6:25 ET. Hope it’s a Peyton blowout so it’s over before Sherlock.

“total payout is $2.5 million”

LOL.

Didn’t CA’s AG (Kamala Harris) get a much better deal by holding out?

How much the lawyers pocketed?

You can buy lots of cake for $1500.

They already got plenty.

McCabe is saying the same thing that we are saying on this blog, and he is right. The institutional investors will cause their own bubble to pop. They will accomplish this either by flipping the houses, or by driving down rents, which will in turn drive down prices.

4. A lot of Romney’s “tone” issues in 2012, where he came off as insensitive or behind the times, were due to the idiots in the GOP field.
————
One day he’ll learn to stand up for himself and stop being pushed around by bullies.

So much for Republicans having conviction and Democrats having causes, eh?

LOL

I liked the part where he made up his own kill list.

Mitt got doinked by his own consultants. Having been a “consultant” himself, I’m sure he knows how that works. Yawn. What goes around, comes around.

You now like Mitt? Having second thoughts over Obama? BTW, the reason I did not vote for Romney is that I did not believe that he really did hold the views on China and illegal immigration that he espoused. The reason I thought it would be better that he won was because after espousing those views, it might have been harder for him to support amnesty. Of course, the ultimate irony is that if McCain had been elected amnesty would have been passed by now. The reason I could not support him in 2008. Amnesty means the death of the nation state called the United States and the end of blue collar workers in America making more than the world rate. We are moving in that direction anyway, but it would mean that we could not revert back to decent wages.

Nice summary. I also think Romney is a good man. But I disagree that he would have governed from the center. He would have been pulled to the far right as President just as he was as a primary candidate.

I always thought the stereotype was that people let themselves go once they found themselves in a stable relationship. Weird how some people have been raised with certain stereotypes, while others have always thought the opposite.

Yeah yeah, another laundry list of “why” the housing market is going to pop. But even Tyler Durden won’t venture a guess as the WHEN and HOW FAR.

“But while warning on yet another subprime implosion is nothing new, and many have done it in the past, why this time may be different and far more timely, is because seriously delinquent borrowers are literally soaring, up from 7% in 2012 to 32% currently!”

This WOULD be a headline, if it were true.

Tyler Durden concluded that the above statement was true from the following text:

“About 32 percent of seriously delinquent borrowers, those at least 90 days late, haven’t made a payment in more than four years, up 7 percent from the beginning of 2012, according to Fitch analyst Sean Nelson.”

What this statement really means is that more and more, the remaining delinquencies are stuck in places where it takes FOREVER to foreclose (judicial states).

Not to worry — the market will come back after the Souper Bowl.

Depositor: Can I withraw my money?

Bank: Why do you want it?

Depositor: So I can close my account.

Sounds like a good way to prevent a bank run.

janet yellen is a visonary who will help these people on food stamps by buying more treasuries from the FED so the treasury can increase payments to food stamp recipients.

It’s a good thing the government reduced annual spending on government contractors from $530 billion to $515 billion, because those food stamps are bankrupting this country.

They hate us because of our freedoms.

So this fictional character Tyler Durden claims to know who the real Ukraininans are and what they want. That’s a good one. Unfortunately, there may be no reliable polling in Ukraine to tell us what the people there want.

The desire of the Western European elites to exploit cheap Ukrainian labor and natural resources is a complicated one. In the case of countries like Poland, the local population appears to be mostly benefiting fomr EU membership.

Hey, it only makes sense for mega corps like GE to pay no income tax while working stiffs foot the bill for the poor and unemployed. And if the local NFL team wants a billion dollar stadium, they by golly, the taxpayers better cough up the dough, otherwise they will find themselves in the shameful position of not having a local team anymore. (Don’t forget to buy your corporate produced snacks for Souper Sunday!)

Tax the 1% more so the .01% can expand their wealth.”

“For whoever has, to him more shall be given, and he will have an abundance; but whoever does not have, even what he has shall be taken away from him.”

Gods work

Although in fairness this has nothing to do with money I’m just being a smarta$$

+1

Just buy land in SF/NYC for 1k/acre, man. No prob. If they offer it to you for 2k, laugh in their face. Smart.

Falling towards a falling target. Per capita wages continue to plummet as millions are shaken out of the workforce. Average income is back to 1998 level.

I think the standard of living will just go down and corporations will own everthing

Now THAT’S real journalism

Good for Cruz and now from Ron Paul:

http://finance.yahoo.com/blogs/talking-numbers/here-s-why-the-fed-is-trapped–ron-paul-183607812.html

Even better: Time the markets. Buy at lows. Extract rents.

No different than primary dealer banks….

“Sallie Mae: .25% interest
Students/parents: 3.85-5.4% interest”

FedGov’s banking policies are all about spoon feeding gravy to Megabank, Inc now so they never again require a bailout.

I think the Thrive Eighty-Five already has a few government programs going to get Africa all started up and ready to manufacture US goods.

Are we going to get an ice cream cone? Can anyone play?

‘Movable hidable wealth - wine!’

Bill, can’t somebody scam wine investors by making knock-off labels and putting them on reproduced bottles ?

Jan. 28, 2014, 1:02 a.m. EST · CORRECTED
India surprises with rate hike; stocks, rupee fall
By Michael Kitchen

Corrects the rate action in the second sentence.

LOS ANGELES (MarketWatch) — The Reserve Bank of India surprised the markets Tuesday by lifting its benchmark interest rate, with the rupee and Indian stocks losing ground following the move. India’s central bank raised the policy repurchase rate by a quarter point to 8%, citing inflationary threats. However, the RBI also said that further tightening was unlikely in the near term if consumer inflation remains around its forecast. Most economists had expected no change to the repo rate, according to a Reuters survey. The RBI did keep the closely watched cash reserve ratio, which dictates how much banks must keep in reserve, at 4%. Stocks in Mumbai gave up their gains after the announcement, with the Sensex and Nifty indexes down 0.7% each. The rupee (USDINR -0.73%) also lost ground, with the dollar rising to 63.19 rupees from 62.97 rupees just prior to the decision.