Tuesday, January 28, 2014

Some news

Some things worth reading:

FT Alphaville - the banks are OK, Spanish edition. Looks like they're saying you can invest in Spain again.

FT Alphaville - on subprime in China. I'd add that Chinese authorities have innovative ways to contain runaway moral hazard that weren't available to the Americans in 2008 - like executing people.

FT beyond brics - Indian market stays out of EM firing line. So don't listen to that "EM bloodbath" crap: this is just fear over Argentina (gimme a break) and Turkey (gimme a break), with some ignorant China fear thrown in, resulting in indiscreet dumping of EEM.

Reuters - Turkish central bank will probably jack up rates. And then the Turkey fear will subside. Quote:
The bank said it would issue a statement on the outcome at midnight (2200 GMT) on Tuesday.

Fearful up to now of an outright rate hike, it has been struggling to defend the lira instead by burning through its forex reserves and trying to squeeze up borrowing costs on the margins - a battle it has clearly been losing.

"We think they are close to throwing in the towel," said Luis Costa, head of CEEMEA strategy at Citi, citing political pressure as the likely reason the bank had been slow to react.

"They probably made sure a more aggressive reaction is sanctioned by Erdogan."

Turkey's yield curve was inverted, suggesting that markets expected significant tightening. The yield on the 10-year benchmark bond rose to 11.02 percent from 10.44 percent on Friday, while the 2-year bond rose to 11.14 percent from 10.99 percent.
Ouch. 11% yield? Do you think EMs can continue growing when the easy money is choked off like that?

Reuters - Greek yields blah blah. Where we get this disaster of a lede:
Greek yields fell on Tuesday as the market took a break from selling riskier assets, but they remained near 2014 highs with the country seen as the most at risk in the euro zone to contagion from emerging market turbulence.
Um... what? Greece is exposed to EM contagion? Maybe it's exposed to a bad Turkish economy, but we knew that 6 months ago. It's certainly not exposed to "contagion" from Argentina, South Africa or China. Clue in, sheeple!

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