Blame Argentina! Some people think it was the 15% drop in the peso that triggered the recent selloff in the emerging markets… and back in the US of A.
On the last two days of the week, the Dow lost nearly 500 points. And on Saturday, after-hours trading signaled worse to come. It looked as though the Dow would drop more than 300 points when the doors opened on Monday. That didn’t happen. Instead, the Dow fell just 40 points. So, we sit tight, wondering if the beginning of the end is coming now… or later.
Get Ready for the Next Emerging Market Crash…
Is This the World’s Cheapest Commodity Play?
Today, a recommendation from a local stock market analyst in Brazil… on what could be one the world’s best-value commodity plays. But first, a look at yesterday’s market action… The Dow fell 104 points. But gold really got socked. It fell $32 an ounce… as “taper” fears once again began to stalk the market. What does it mean? It’s a question we’ve been asking at Bonner & Partners Family Office, the small family wealth advisory we set up back in 2009.
Don’t Invest Here in 2014…
Dow down 129. Gold down $3 an ounce. No big deal. Good thing, too, because we don’t have much time to think about it. We’re on the road… in Brazil. At Bonner & Partners Family Office, the small family wealth advisory we set up in 2009 to help families protect and pass on wealth, we’re bullish on emerging markets stocks in general… and bearish on developed market stocks in general. That’s because we’re long-term investors. And the long-term growth prospects – to our eyes at least – are better in the emerging world… where populations are still growing… debt build-ups aren’t as high… and relatively low market capitalizations for stock markets mean more room for growth.
Is This Emerging Market About to Be Hit by a ‘Perfect Storm?’
The Dow fell 52 points yesterday. Gold was up $26 an ounce. Good news? Bad news? Bad news as good news? Good news as bad news? Bad news as good news as bad news? GDP is growing faster than expected. So the Fed will taper, right? But GDP growth is largely an illusion because it is mostly unsold products stacking up on shelves. Bad news means the Fed won’t taper, right? So, it’s good news after all. Or is it…? Aw, shucks… we don’t know. So, we’ll turn to something else. “What’s the outlook for Brazil?” we asked our colleague Rodolfo Amstalden of Empiricus Research in Sao Paulo.
Our Visit to Miss Brazil…
First, what are we doing in Sao Paolo? Two things… We’re checking in with colleagues who are Brazilian stock market analysts. And we’re visiting a candidate for Miss Brazil, who just happens to be a friend’s cousin. We’ll let you know more as things develop… Meanwhile, US stocks were flat yesterday. Gold rose $5 an ounce. Nothing significant in that news. For what it’s worth, we think the stock market is poised for action. It could shoot up much higher, as dreams of “QE Forever” take hold of investors’ imaginations. Or it could drop like a stone when they realize QE doesn’t really help the economy that their stocks depend on.
What a Tangled Web We Weave…
First, let’s check the markets. The Dow fell 66 points yesterday. And gold sold off too – down $10 an ounce. In August, our hypothesis was that we would see falling US stock markets and rising gold prices as the dominant trends of fall. So far, we haven’t seen much in the way of trends at all.
