Reuters blog archive
Without a lot of fanfare, the U.S. equity market has worked its way back to a few points of all-time highs, as concerns over emerging markets (largely related to Ukraine) have magnified, as have worries over China's struggling growth.
That's once again produced the "best house in a bad neighborhood" effect for the U.S. stock market; bond yields remain range-bound in the 2.70 to 2.75 percent area, the 10-year still reflects a value that doesn't suggest economic acceleration or worries over massive slowing either.
One of the better indicators of the effect of China's slowdown comes out of Brazil, where Vale SA, the world's largest iron ore producer and exporter, will issue its fourth-quarter results.
The company was expected to exceed expectations due to cost cutting and higher iron ore prices, but sluggish demand in China is a long-run effect that cannot be shunted aside. Starmine sees the stock as heavily undervalued, as it has been in a persistent downward trend since early 2011, when it peaked at about $35 a share (US); it now marks time around $13 to $14. The company did surprise the last time, so it's got that going for it.
from Photographers' Blog:
Jacareacanga, Para (Brazil)
By Lunaé Parracho
"We're asking you not to go," one of the Munduruku Indians said to me while standing in a circle of ten other warriors.
They feared that I would slow them down if I accompanied them on another six-hour hike through the forest to a wildcat gold mine operated by intruders in their territory. This was to be the fifth mine dismantled by the Mundurukus, who live in Brazil’s Amazon rainforest in the western state of Para. This region is rich in natural resources and has been called the country’s new frontier of economic expansion.
from Photographers' Blog:
Rio de Janeiro, Brazil
By Sergio Moraes
Sports and I have always had an intense relationship. Ever since I was very young, I played street soccer, here called futebol, with friends. I was influenced by my father, a newspaper photographer who covered a lot of soccer and who made me want to do the same.
In my 33 years of taking all kinds of pictures, my greatest experiences were while covering sports, especially the Olympic Games. The Olympics are special to me because they give me the opportunity to photograph and experience sports that aren't normally played in Brazil. But even after several Olympics, I still haven’t had the chance to cover American sports like NFL football, NBA basketball, and MLB baseball. I’ve watched some of those leagues during visits to the U.S., and that only made me want to photograph them even more. I'm fascinated by their level of organization, their grandeur, and their marketing.
A hot, dry spell in southeastern Brazil has pushed up energy prices, stretched government finances and raised the threat of water rationing in its largest city, Sao Paulo, just months before it hosts one of the world's largest sport events, the soccer World Cup.
It looks like the last thing Brazil needed as it scrambles to woo investors and avoid a credit downgrade.
from Anatole Kaletsky:
What has caused the sudden anxiety attack that overwhelmed financial markets after the New Year? We may find out the answer at 8.30 on Friday morning, Eastern Standard Time.
Almost all agree that the market turmoil has been linked to alarming events in several emerging economies -- including Turkey, Thailand, Argentina and Ukraine -- that has spilled over into concerns about more important economies, such as China, Russia, South Africa, Indonesia and Brazil.
from Global Investing:
Despite all the doom and gloom surrounding capital-hungry Fragile Five countries, real money managers have not abandoned the ship at all.
Aberdeen Asset Management has overweight equity positions in Indonesia, India, Turkey and Brazil -- that's already 4 of the five countries that have come under market pressure because of their funding deficits. The fund is also positive on Thailand and the Philippines.
from Photographers' Blog:
Sao Paulo, Brazil
By Nacho Doce
I heard a loud scream and turned to see a Volkswagen Beetle on fire just a few meters away. I was covering the year’s first demonstration against the 2014 World Cup in Sao Paulo's Roosevelt Square. The protesters’ slogan was, “The money spent on stadiums could give the country better education and health.” There were more than 2,000 people marching, many of whom belonged to the Black Bloc.
I ran to the burning car along with other colleagues and demonstrators, and inside I saw two woman and a young girl. I managed to shoot four pictures of their expressions of fear and panic while the driver and others helped them to escape from the fire.
So, it's been a few days. Which means the markets have hit that point in the Star Trek episodes when the Klingons were temporarily short of torpedoes, which gave the Enterprise crew time to suss out what was going on.
Some of the missiles were fired. Big rate hikes from Turkey and South Africa, that followed a rate hike from India, and a few conclusions are inescapable:
Brazil's current account deficit will probably narrow this year. That may sound as a reassuring (or rather optimistic) forecast after the recent sharp sell-off in emerging markets, which prompted Turkey to raise interest rates dramatically to 12 percent from 7.75 percent in a single shot on Tuesday. But that was the outlook of three major banks - HSBC, Credit Suisse and Barclays - in separate research published earlier this week.
The gap, a measure of the extra foreign resources Brazil needs to pay for the goods and services it buys overseas, will probably shrink to 3.0-3.4 percent of GDP in 2014, from 3.7 percent last year, they said.
This week will go a long way to determining whether a violent emerging market shake-out turns into a prolonged panic or is limited to a flight of hot money that quickly fizzles out.
On our patch, Turkey is under searing pressure, largely of its own making and that is the theme here. Yes, the Federal Reserve’s slowing of money printing is the common factor, prompting funds to quit emerging markets, but it is those countries with acute problems of their own that are really under the cosh.