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Time to stay away from emerging markets
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I think US ans Europe market fears soon will impact emerging markets in a heavy scale.
I suggest my readers to stay away from countries such as New Zealand,South Africa,Iceland,Argentina and Turkey.Russia is still strong and balace of trade is on the positive side with plenty cashin its reserves.Although I beliee the fundemantals are strong and US economy is very strong the fear based cash shortage will lead to some problems specially in emerging markets.For US stock market financial shares might lose further ground however they are close to the bottom.At the end of the year we will see good results.Meanwhile stay away from emerging markets because in case of a cash shortage investors will look at high risk emerging markets in their first opportunity.
It will be a weekend of high anxiety for investors on Wall Street, as they brace themselves for what will likely be another rollercoaster ride for the battered financial markets.
Any more signs of spreading losses tied to risky subprime mortgages are likely to send U.S. stocks into more of a tailspin this week, exacerbating calls for the Federal Reserve to ride to the rescue.
Global equity markets were roiled last week, as fears that a widening fallout from worsening lending conditions could take a bite out of economic growth and corporate profits swept through financial markets.Worries that another shoe may drop in the global credit crisis escalated last Thursday, after French bank BNP Paribas froze three debt funds because of the turmoil in subprime markets. And analysts say there may be more trouble ahead.
"MORE CASH FROM THE FED?
Central banks rushed to pump extra cash into the financial system this week in an attempt to temper fears about the liquidity crisis that is gripping investors worldwide.
The U.S. Federal Reserve provided the banking system with a total of $38 billion in three separate moves on Friday, the largest amount of liquidity since the days after the September 11 attacks six years ago, adding ample funds for the second day running as financial markets fretted over credit conditions.
The Fed also took the unusual step of making a rare statement after the first operation -- the first time it has done so since the September 11, 2001, terror attacks -- in an effort to calm investors' fears.From my point of view, depending on the level of credit stress, you could see more liquidity injections. The Fed has already shown that if they have to, they will.
By Friday's closing bell, the S&P 500 squeaked out a gain of 0.55 of a point, or 0.04 percent, to finish a wild day at 1,453.64, off its session low at 1,429.74. The Dow average had sharply cut its earlier losses and ended Friday's session with a decline of only 31.14 points, or 0.23 percent, at 13,239.54. Earlier, the Dow had fallen more than 200 points to a session low at 13,057.86. The Nasdaq closed on Friday at 2,544.89, down 11.60 points, or off 0.45 percent. The Nasdaq fell as low as 2,503.16 during the market's earlier plunge.
Despite big sell-offs on Thursday and Friday, all three major U.S. stock indexes ended the volatile week with gains: The Dow Jones industrial average added 0.4 percent, the Standard & Poor's 500 index advanced 1.4 percent and the Nasdaq composite index rose 1.3 percent.
For the year so far, stocks are still in positive territory. The Dow is up 6.2 percent, while the S&P 500 is up 2.5 percent and the Nasdaq is up 5.4 percent.
ON INFLATION WATCH
While a heavy week for economic data may pale against the backdrop of liquidity concerns, inflation data could be important in setting a parameter for what the Federal Reserve will do next.If you get strong inflation numbers, it puts the Fed in a difficult position, as the market wants them to cut, but they've made it very clear that their priority is inflation.
On Wednesday, the closely watched core CPI, which excludes volatile food and energy prices, is expected to rise 0.2 percent in July, matching June's gain. The core Producer Price Index, due on Tuesday, is expected to rise 0.2 percent, following June's gain of 0.3 percent.
Consumer confidence numbers will also be closely watched, with the Reuters/University of Michigan Consumer Surveys' preliminary August reading on the consumer sentiment index due on Friday. Economists surveyed by Reuters expect the consumer sentiment index to slip to 88.0 in August from July's 90.4.
The fear is that the credit crunch means people won't be able to draw equity from their homes and spend as lavishly as they have- so any weakness in the consumer confidence will confirm that fear.
Investors may eye U.S. retail sales data for July on Monday for clues on changes in consumer habits, as well as earnings updates from retailers Home Depot Inc. Wal-Mart Stores Inc. both due on Tuesday.
With the focus on the housing sector, July housing starts on Thursday are likely to come under close scrutiny. The Reuters poll of economists showed that July housing starts are forecast to decline to an annual rate of 1.405 million units from 1.467 million in June. Building permits for July also are likely to slip to an annual pace of 1.400 million units from 1.413 million the previous month.Thursday's economic numbers will include the weekly jobless claims and the Federal Reserve Bank of Philadelphia's index for August. |
| Tarih
: 13.08.2007 |
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© 2006 Mert TOKER All Rights Reserved. |
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