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Emerging Markets Preview: The Week Ahead

September 30, 2013
(from my colleagues Dr. Win Thin and Ilan Solot)

Brazil's government will report August budget data Monday, with the primary surplus expected at BRL1.6 bln vs. BRL2.3 bln in July. We think that if negative fiscal trends continue, Brazil runs the risk of a downgrade. S&P moved the outlook on its BBB rating from stable to negative back in J…
Emerging Markets Preview: The Week Ahead Emerging Markets Preview: The Week Ahead Reviewed by Marc Chandler on September 30, 2013 Rating: 5
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Great Graphic: R&D Expenditures

September 30, 2013
This Great Graphic was posted in the Wall Street Journal, which it got from R&D Magazine.  It shows research and development expenditure in billions of dollars and as a percent of GDP.    
Expenditures in dollar terms favor the larger economies.  This is in fact born out.  The four largest economies have the largest R&D expenditures (US, …
Great Graphic: R&D Expenditures Great Graphic: R&D Expenditures Reviewed by Marc Chandler on September 30, 2013 Rating: 5
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Dollar Mixed, Markets Nervous, Politics Cut Appetite for Risk

September 30, 2013
The US dollar is narrowly mixed amid heightened political concerns.  A shutdown of the US federal government looks increasingly likely and the withdrawal of the center-right ministers has prompted a crisis in Italy.  Global equities have been undermined, with the MSCI Asia-Pacific Index off almost 1.5%, and the MSCI Emerging Market Index off 1%.��…
Dollar Mixed, Markets Nervous, Politics Cut Appetite for Risk Dollar Mixed, Markets Nervous, Politics Cut Appetite for Risk Reviewed by Marc Chandler on September 30, 2013 Rating: 5
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Pieces of Eight: Drivers in the Week Ahead

September 29, 2013
The fourth quarter begins with a bang. The US government risks closure due to an inane argument over authorizing continued government spending and issuing debt to cover the past spending that was authorized. Provided the US government is open, the important monthly jobs report is due out at the end of the week. The Italian government appears to …
Pieces of Eight: Drivers in the Week Ahead Pieces of Eight: Drivers in the Week Ahead Reviewed by Marc Chandler on September 29, 2013 Rating: 5
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Cool Video: Vertical Farming Cool Video: Vertical Farming Reviewed by Marc Chandler on September 29, 2013 Rating: 5
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Great Graphic: The Real Drag of Government

September 28, 2013
This Great Graphic was posted on Business Insider by Sam Ro, who got it from the Chicago Fed President Charles Evans. It shows the US government's contribution to GDP. The fiscal drag that the US is experiencing now appears to be the largest in modern times--last half century.
Despite the name calling in the blogosphere, President Obama i…
Great Graphic: The Real Drag of Government Great Graphic: The Real Drag of Government Reviewed by Marc Chandler on September 28, 2013 Rating: 5
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Currency Positioning and Technical Outlook: No Comfort Yet for Dollar Bulls

September 28, 2013
We had anticipated that the market's disappointment with the Federal Reserve would initially weigh on the dollar, but we had thought the focus would shift back toward Europe, especially after the German election.  We anticipated that, by default, this would be more supportive of the dollar against the major currency currencies after it had tr…
Currency Positioning and Technical Outlook: No Comfort Yet for Dollar Bulls Currency Positioning and Technical Outlook: No Comfort Yet for Dollar Bulls Reviewed by Marc Chandler on September 28, 2013 Rating: 5
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Great Graphic: International Comparison: Composite PMI Readings

September 27, 2013
This Great Graphic comes from the folks at Markit, who coordinate and conduct the purchasing managers surveys.   These reports typically track economic activity fairly well and have become important for both investors and policy makers.  
In recent months, the ECB has frequently cited the survey data to confirm the recovery in the euro area. That s…
Great Graphic: International Comparison: Composite PMI Readings Great Graphic: International Comparison: Composite PMI Readings Reviewed by Marc Chandler on September 27, 2013 Rating: 5
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Week with Much Potential is Ending with a Whimper

September 27, 2013
The US dollar remains primarily confined to yesterday's trading ranges and has spent most of the week consolidating within the ranges established after the Fed's decided not to taper its purchases of long-term assets last week.   There had been much potential, with the German election, the flash PMI data, US fiscal morass, and month and qu…
Week with Much Potential is Ending with a Whimper Week with Much Potential is Ending with a Whimper Reviewed by Marc Chandler on September 27, 2013 Rating: 5
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Emerging Markets: What has Changed

September 26, 2013
(from my colleagues Dr. Win Thin and Ilan Solot)
1) Brazil's central bank is not tapering its FX intervention plan

2) The Philippine central bank outlined the tools it will use to counter Fed tapering

3) The RBI is taking further steps to improve the liquidity situation and help stabilized capital markets

4) There were some…
Emerging Markets: What has Changed Emerging Markets: What has Changed Reviewed by Marc Chandler on September 26, 2013 Rating: 5
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Great Graphic: Jobless Claims and S&P 500

September 26, 2013
This Great Graphic, composed on Bloomberg, is fascinating. It tracks the 4-week moving average of weekly initial jobless claims and inverts the line.  The decline in weekly jobless claims is now shown as a rising line depicting the improvement in this measure of the labor market.  The yellow line is the S&P 500.  
The two have been tracking e…
Great Graphic: Jobless Claims and S&P 500 Great Graphic: Jobless Claims and S&P 500 Reviewed by Marc Chandler on September 26, 2013 Rating: 5
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Brief China Update

September 26, 2013
There are four developments in China to note.
First, in what seems a bit like "buy the rumor sell the fact" type of activity, the Shanghai Composite slipped 1.9% today to a three week low. Reports suggest profit taking is on issues that were bid up on the announcement that a free-trade zone was going to be established in Shanghai.
Se…
Brief China Update Brief China Update Reviewed by Marc Chandler on September 26, 2013 Rating: 5
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Thursday's Drivers

September 26, 2013
The US dollar appears somewhat firmer today, but is in fact consolidating.  Against most of the major and emerging market currencies, it remains largely confined to yesterday's ranges.  The downside momentum that had threatened to build has dissipated.  
One of our thematic points was that the next leg up for the dollar might be more driven by …
Thursday's Drivers Thursday's Drivers Reviewed by Marc Chandler on September 26, 2013 Rating: 5
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Thoughts on Hump Day

September 25, 2013
Investors continue to wrestle with the implications of the Federal Reserve's decision last week not to taper. What is being generally overlooked is that a full third of the market, according to various polls, did not expect the Fed to taper.  
Many journalists were surprised, and this seems to be coloring their coverage. For example, just ye…
Thoughts on Hump Day Thoughts on Hump Day Reviewed by Marc Chandler on September 25, 2013 Rating: 5
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Italy's Problems Persist Despite Post-Fed Relief Rally

September 24, 2013
Italy's benchmark 10-year bond yield has fallen about 20 bp since the Fed's decision not to taper and it has moved back below comparable Spanish yields, but its problems have not diminished.  Rumors of a downgrade that circulated in the European afternoon reflect ongoing concerns.  
S&P had cut Italy's sovereign rating to BBB in Ju…
Italy's Problems Persist Despite Post-Fed Relief Rally Italy's Problems Persist Despite Post-Fed Relief Rally Reviewed by Marc Chandler on September 24, 2013 Rating: 5
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Great Graphic: US Deleveraging, Europe Still Leveraging?

September 24, 2013
This Great Graphic was posted on Business Insider by Sam Lo, who got it from Neil McLeish, a fixed income analyst at Morgan Stanley.  It depicts total debt (household, financial firms, corporates and government, divided by GDP).  Most of the chart (yellow line) tracks the US, though more recent European date is included (green line).  
The rising…
Great Graphic: US Deleveraging, Europe Still Leveraging? Great Graphic: US Deleveraging, Europe Still Leveraging? Reviewed by Marc Chandler on September 24, 2013 Rating: 5
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Dollar Drifts Higher Amid Man Bites Dog News Flows

September 24, 2013
The US dollar is generally firm, though gains against the antipodeans and sterling are somewhat larger. These were the currencies that had been the strongest last week, and the stalling of the upside momentum, rather than fresh fundamental developments appear to be the major catalyst.
The euro posted an outside down day yesterday (trading on bot…
Dollar Drifts Higher Amid Man Bites Dog News Flows Dollar Drifts Higher Amid Man Bites Dog News Flows Reviewed by Marc Chandler on September 24, 2013 Rating: 5
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