Inflationary pressures may be problem in emerging countries.
Monday, March 1, 2010. 9:15 am.
Global markets, particularly emerging markets, have been underperforming the U.S. market so far this year.
One problem probably stems from the financial crisis experienced in the developed countries which left still partially frozen credit conditions globally.
With credit hard to come by, lenders are charging higher interest rates for what loans are available, especially for their less credit worthy customers, which in most cases includes projects in emerging countries.
The Financial Times this morning says that has “investors concerned that emerging market central banks will have to tighten monetary policies quickly to keep a lid on inflation [delivering a further blow to their growth outlook].
The FT reports that significant rate increases are already being forecast for Brazil, Turkey, Mexico, and India.
Global stock markets have been losing their upside momentum.
The VanGuard European etf, which tracks with European markets, is down 15%. Stock markets in the strongest global economies, China and India, which Wall Street has been touting as the place for investors to be, are down 12% and 8% respectively. Japan, the 3rd largest economy in the world, sees its stock market down 8%. Mutual funds tracking with emerging markets are down about 10%.
Only in the U.S. does there seem to be few worries, as least as measured by the stock market, where both the conservative Dow and the speculative Nasdaq are down only 3% or so.
It would be unusual for global markets not to move in tandem for long. In the current divergence which have it right?
Interesting observations.
In the 1960’s some people dropped acid to make the world seem weird. Now the world is weird and they take Prozac to make it seem normal.
Wall Street’s financial institutions and the regulators say this year that uncontrolled short-selling is not a problem for the market, corporations or investors, and does not need to be regulated. In 2008 when the stocks of their own firms ran into heavy short-selling they screamed bloody murder and the SEC rushed in and banned all short-selling in some 85 major financial firms for months.
Asian markets closed up last night.
The DJ Asia-Pacific Index closed up 0.8%.
Among individual countries:
Australia closed up 0.9%. China closed up 1.2%. Hong Kong closed up 2.2%. India closed up 1.1%. Japan closed up 0.4%. Singapore closed up 0.8%. South Korea closed up 0.5%. Taiwan closed up 1.9%.
If you’d like to see a three-month chart of these indexes and others, click here, and then click on any of the markets in the list at the left side of the page it takes you to.
Markets this morning.
European markets are mixed, up fractionally in Britain, more than 1% in Germany, overall on average of about 1/2%.
Oil is up $.65 a barrel at $80.31.
Gold is down $3.20 an ounce at $1,116.
Markets in the U.S.
In the U.S., this week’s important economic reports continue to come out. To see the full schedule of the week’s reports click here, and look at the left side of the page it takes you to.
Last week it was that the Conference Board’s Consumer Confidence Index plunged sharply in February; New Home Sales plunged 11% in January; Existing home sales fell 7.2%; Durable Goods Orders were a negative in that ex the big aircraft, orders orders fell 0.6%; and unemployment claims rose 22,000 last week, the second straight weekly rise.
But the revision of 4th quarter GDP to 5.9% GDP growth from 5.7% was a positive, exactly in line with economists’ consensus estimate.
So far this morning we’ve had the Personal Income & Spending report, which was that consumer incomes rose 0.1% in January, the smallest rise in four months. But spending rose 0.5% the highest pace since May, 2008.
Still to come are the ISM Mfg Index, and the Construction Spending report, due out at 10 am.
Our pre-open indicators are fractionally positive, pointing to the Dow being up 40 points or so in the early going.
Stock Market Patterns.
The current pattern is the ‘Monthly Strength Period’, which was due to begin last Friday and to run through this Thursday (March 4). Its tendency to be positive is quite persistent in bull markets, not so often in bear markets.
Interesting Charts of the Morning.
I’m sorry but I don’t have time to provide interesting charts of the morning, but there are a dozen or so from the last two days. Please scroll down to see them.
To read my weekend newspaper column ‘Is the Stock Market Saying the Economy Will Remain Strong?’ click here!
SUBSCRIBERS: There is an updated intermediate-term ‘Market Signals, Charts, and Recommendations’ report on your website from Wednesday, and an updated ‘Gold, Bonds, Dollar’ signals and charts report from Thursday. The next ‘Market Signals, Charts, and Recommendations’ report will be out on Wednesday this week.
Non-subscribers: While it’s helpful to look at daily and short-term expectations, it is the intermediate and longer-term signals and market moves that are most important to investors. So, please consider a subscription to our independent research and recommendations. The cost is equivalent to the cost of two cups of coffee per week. Can you afford not to subscribe?
Street Smart Report Online provides our intermediate-term signals, outlook, and recommended holdings. Sectors, stocks, bonds, gold, short-sales, long-side and inverse etf’s and mutual funds. Highly regarded and in its 22nd year. In-depth weekly reports, newsletter, hotline, and much more! As a bonus for a one-year subscription you will also receive my latest book Beat the Market the Easy Way- Proven Seasonal Strategies That Double the Market’s Performance. Click here for subscription information.
