| Emerging markets like Brazil are in danger of overheating, potentially leaving millions of investors’ savings at risk, experts are warning. |
Emerging markets like Brazil are in danger of overheating, potentially leaving millions of investors’ savings at risk, experts are warning.
Top financial advisers are concerned that a rash of fund launches in the BRIC economies - Brazil, Russia, India and China - might be attracting investors unused to risky funds.
And they also question whether these volatile markets are heading for a fall. |
a key measure of value for investors (and a measure of over-exuberance) known as the price-earnings ratio is huge.
The higher the PE, the more a company must increase its earnings to justify its share price.
Based on one way of measuring, the average PE on the Chinese stock market is about 50. In comparison, in Britain it’s about 14. Read more at www.dailymail.co.uk |
| At the end of this month, the US Federal Reserve is due to freeze its programme to purchase Fannie and Freddie agency MBS that it implemented in the wake of the financial crisis. Logic might suggest that could potentially deliver a jolt to the market. |
| he degree of assistance that the Fed has provided has been eye-poppingly large: right now it is holding some $1,200bn of MBS |
| in the past couple of years, the Fed (and others) have poured so much money into the system, that this has made it painfully hard for mainstream fixed income investors to get returns, without taking very wild risks. |
| During the past two years, the full impact of the collapse of the securitisation market has been largely concealed from most investors – let alone American politicians – because of the sheer scale of government assistance on offer. |
| investors have been lulled into something of a false sense of security |
| carbon trading is now the fastest growing commodities market on earth |
| Carbon developers”, many of them employed by large multinationals, travel the world in search of carbon reduction projects to sell, while firms of carbon accountants have been established to verify on the United Nations’ behalf that those reductions are real. The whole thing, though well intentioned, looks wide open to abuse and scams. |
| I wonder what all the wide eyed climate change campaigners are going to say when the first scandals begin to break, still more what they’ll make of it when the whole thing turns out to be another giant asset bubble – if indeed the non production of carbon can be described as an asset.Read more at blogs.telegraph.co.uk |
Fears of a double-dip recession intensified this morning as the sharpest
monthly fall in retail sales in one and a half years was revealed.
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The downbeat spending figures come the morning after a shock rise in public
sector borrowing emerged, casting doubt over the recovery. The £4.3 billion
deficit for last month is the first time on record that the Treasury has not
recorded a January surplus.
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Treasury coffers were hit by a plunge in tax receipts prompting concern that
Britain’s finances could be worse than those of Greece.
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| Between December and January, total sales volumes decreased by
1.8 per cent, the largest decrease since June 2008, |
The retailing data is also likely to reinforce expectation that interest rates
will remain on hold for the most of this year, despite recent rises in
inflation.
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| Add into the mix the ongoing urge to
save or to pay down debt, plus the impending rise in income taxes, and
consumer spending seems likely to continue to spiral downwards in the months
aheadRead more at business.timesonline.co.uk |
Goldman Sachs won’t be able to make record profits borrowing from the taxpayer and using the money to inflate stock market prices for their own profit. We won’t know for sure until tomorrow. If tomorrow is another bad day – as it probably will be – then it will be clear that the last stage of the bear market has arrived. This should be the final drop…when stocks should go down to their ultimate bear market low. |
| Where will that be? We don’t know. Maybe Dow 5,000. Maybe lower. One way or another every major bull market needs a major bear market. |
| If this bear market is going to correct the entire bull market from 1982 onward, |
| it has to take prices back to the levels they were when it began |
Another way to look at it is to ask ourselves what the Dow of ’82 would be today, adjusted for consumer price inflation. We don’t know the answer to that either…but we’ll guess that it would be about 4 times what it was then – or about 4,000. |
“Contagion” is a very emotive word which has re-entered the financial lexicon over the past couple of weeks. It will be added to our tag list. 10.00 GMT: European and UK stock markets opened sharply lower on Friday with the costs of insuring the sovereign debt of Portugal and Greece hitting new record highs as contagion fears gripped markets. |
The FTSE 100 opened 1.6 per cent lower to its lowest levels for three months with the FTSE Eurofirst 300 down a similar amount with financials and resources companies leading the declines. |
In Asia, risk aversion spread across markets amid a sell off across the region following Thursday’s sharp losses on Wall Street and in Europe, and as investors eyed keenly awaited non-farm payroll numbers in the US later in the day. |
Sovereign debt contagion from Greece across the eurozone remained the key concern, according to analysts, following Thursday’s rises in government bond yields in periphery countries such as Portugal and Spain. |
Markets were spooked on Thursday by worse-than-expected first-time claims for US unemployment benefits, sparking fears that economic recovery may be waning. Read more at www.ft.com |
“You can run to the rocks, but you can’t hide.” (Jimmy Cliff) | Fears of sovereign debt contagion across the eurozone sent European markets sharply lower on Thursday as negative sentiment spread to Wall Street with US markets also hit by worse than expected jobless data
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European and UK stock markets fell more than 2 per cent, with Portuguese and Spanish stock markets leading the declines with falls of 5 per cent or more. Investors also sold sovereign debt in these periphery eurozone countries and sought the safety of the dollar and US Treasuries. |
The euro fell below $1.377 against the dollar, hitting lows last seen in May 2009. |
| The dollar benefited from its safe haven status and was up 0.6 per cent against a basket of trade-weighted currencies, its highest level since July last year. |
| Worse than expected jobless data in the US added to the woes, |
So, from where will the money come for the next wave of bailouts? Too bad some of those billions in bonuses was not re-invested in building banks’ balance sheets. Still, it probably would not have been enough to make much difference, and bankers don’t believe in going down with the ship. Sauve qui peut is their motto. (Rough translation - every man for himself.) | Banks must raise billions to fend off crisis, says IMF |
The world’s biggest banks face an impending funding crisis, with a “wall
of maturities” fast approaching, and must raise billions more in
capital in the coming years, the International Monetary Fund (IMF) has
warned.
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In comments which will reignite fears of a relapse into a second financial
crisis, the IMF said that
banks have yet to bolster their balance sheets sufficiently and could be
vulnerable to a whole range of shocks in the coming months.
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It also indicated that with governments including the UK and the US borrowing
so much in the next few years, there was an increasing chance of a sovereign
debt crisis, something which could trigger chaos for public and private
sectors alike.
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Now Goldman Sachs et al have been making record profits by borrowing money from the taxpayer at next to nothing, and ‘investing’ it in a self-generated stock market bounce. What can they do when the market falls? At least, there won’t be any more bonus’s to stir people up. | Risk aversion remained the prevailing theme across global markets on Wednesday. |
| investors know that the central bank must soon allude to the need for less stimulus. We need tough love, but please not quite yet appears to be the market’s refrain. |
Until then, investors will have to navigate a market whose tone has turned distinctly short-term bearish since equities hit fresh 15-month highs a week ago. Fears of the impact of a more restrictive Chinese monetary policy, continued rumblings about the fiscal health of Greece and other severely indebted nations, and worries about the effect on the earnings and efficiency of the banks following the “Volcker Rule”, have hit sentiment. |
| And as if there isn’t enough uncertainty, there is always the chance that today’s Capitol Hill grilling of Tim Geithner on the AIG rescue could produce further leverage for those wishing to see the back of the embattled Treasury secretary. Read more at www.ft.com |
Is this Peak Stocks? The only question, then, would be how quickly they fall. 17:35 GMT. Stocks dropped sharply on Thursday as President Barack Obama said he intended to prevent deposit-taking banks from undertaking any proprietary trading. |
The president said he wanted to end the mentality of “too big to fail” in financial markets. “If the banks want a fight, it’s a fight I’m willing to have”, he added. |
“After a liquidity and stimulus driven rally, stocks are starting to reflect the realities of structural imbalances in both the economy and the policy responses.” |
The Dow Jones fell 212 points, its fourth consecutive day of triple-digit moves. The volatility saw the Vix index, known as Wall Street’s fear gauge, jump 13 per cent to move back above 21.0. Read more at www.ft.com |
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Are the BRICs built on shaky foundations?
