Monday, May 14, 2012

Emerging market should be renamed BEAR MARKET


Emerging Stocks Fall to Four-Month Low on Greece, China Concern (Update 1)

Emerging-market stocks fell to a four-month low on concern Greece will exit the single European currency and amid speculation China’s cut in banks’ reserve requirements will be insufficient to stem an economic slowdown.
The MSCI Emerging Markets Index (MXEF) dropped 1.2 percent to 958.75 as of 12:34 p.m. in London, the lowest since Jan. 17. Banks led declines among emerging-market stocks, with OAO Sberbank, the largest Russian lender, retreating 2.2 percent. OAO Gazprom, the world’s biggest natural gas exporter, slid 2.8 percent in Moscow as oil fell below $94 a barrel in New York for the first time since December.
Greece’s political deadlock looked set to continue for a second week as President Karolos Papoulias failed to secure agreement on a unity government. The People’s Bank of China announced on May 12 it is cutting the amount of cash that banks must set aside as reserves for a third time since November, pumping money into the financial system to support lending. Reserve ratios will fall 50 basis points, effective May 18.
“The outlook for global emerging markets continues to be quite challenging, with the deterioration of the backdrop in Europe,” Benoit Anne, head of emerging-markets strategy at Societe Generale SA in London, wrote in an e-mail to clients.

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Thursday, May 10, 2012

Shocking "China import growth comes to screetching halt" at 0.3% vs. 11.0% estimate.

That is a miss of nearly 97% below estimate on a percentage basis.

China Trade Growth Slumps in April

By Published: May 10, 2012 


HONG KONG — As China’s leaders have been preoccupied with a political struggle leading up to a once-in-a-decade leadership change this autumn, there are increasing signs that the Chinese economy may be running into trouble. 

China announced Thursday that growth in imports had unexpectedly come to a screeching halt in April — rising just 0.3 percent from the same period a year earlier, compared with expectations for an 11 percent increase. Businesses across the country appeared to lose much of their appetite for products as varied as iron ore and computer chips. 

China has been the largest single contributor to global economic growth in recent years, and a sustained slowdown in its economy could pose problems for many other countries. Particularly exposed are countries that export commodities like iron ore and oil and depend on demand from China’s voracious steel mills and ever-growing ranks of car owners. 

Exports, a cornerstone of China’s torrid economic growth over the past three decades, grew only 4.9 percent last month — half as fast as economists had expected. And a slump in new orders over the past month at the Canton Fair, China’s main marketplace for exporters and foreign buyers, suggests that overseas shipments by the world’s second-biggest economy, after that of the United States, may not recover quickly. 

Growth in other sectors appears to be slowing, too, particularly in real estate. Soufun Holdings, a Chinese real estate data provider, released figures Monday showing that residential land sales in the country’s 20 largest cities had fallen 92 percent last week from the week before, as declining prices for apartments have left developers short of cash and reluctant to start further projects. 

In a series of interviews over the past week, bankers and senior executives from provinces all over China, in a range of light and heavy industries, cited a broad deterioration in business conditions. Two of them said that some tax agencies in smaller cities had been telling companies to inflate their sales and profits to make local economic growth look less weak than it really was, while reassuring the companies that their actual tax bills would be left unchanged. 

There are early signs of a credit crunch, at least among private sector companies. Many seem to be asking their suppliers for more time to pay debts and complaining of cash flow problems. Zhang Jinmei, the sales manager at Qitele Group, a company that makes playground equipment in the coastal city of Wenzhou, said that local investment and lending pools there were starting to charge higher interest rates for loans, a sign of worries about creditworthiness. 

Wednesday, May 2, 2012

Time to Shift to Bear Mode (May-July)

Why shift to Bear Mode? Well the market is up 6 of the last 7 months. I think the pullback that everyone was calling in Feb.-April will finally start in the May-July period.

The really big money spenders will start going away on vacation now and will pull out their investments so they can enjoy their vacation without thinking about what the markets are doing.

That coupled with the usual problems that always appear during the summer like European crisis, Iran Oil halt deadline in June and slower trading activity will lead to the path of least resistance being down.

 El-Erian: Spain could make or break Europe, Greece is set up to run on borrowed money indefinitely, that is impossible.

A string of horrific PMI data from the Euro Zone economy :

Italy and Spain registering sub-44 Manufacturing PMI’s.

China Manufacturing PMI continuing to show a sub-50 reading.

Germany came in with by far the worst payrolls release since mid-2009.

The overall March Euro Zone unemployment rate coming in at a heady 10.9%.

 The Bears are Back from Hibernation and its not looking Pretty.