Submerging Markets

[rffrydr]

Middle East, Mexico, Asia, India.... Reuters reports police are patrolling the lakes and backwaters looking for broker suicides.

OECD says japan should keep rates at zero until next year and then up 100 basis points. Calls for US inflation below 2.3% next year.

[HenryTo]

Bonds holding relatively well today, despite the worst turnout in the five-year note auction since June 2003. See below from Briefing.com:
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1:30 pm : Range-bound trading persists for stocks as the indices continue to vacillate around the unchanged mark. Bonds also haven't veered out of their relatively tight trading ranges, despite today's $14 bln 5-yr note auction drawing the worst indirect bidder participation (18.3%) since June 2003. The 2.08 bid-to-cover ratio was also somewhat weak; however, with all eyes on the Fed, the 10-yr note is still off 5 ticks to yield 5.22%. DJ30 +4.40 NASDAQ -1.47 SP500 +2.03 NASDAQ Dec/Adv/Vol 1728/1165/938 mln NYSE Dec/Adv/Vol 1555/1571/826 mln

[HenryTo]

Turkey is one of those countries I have been singling out as an "overrated" emerging market country. Same with Russia.

Moreover, the fact that the Turkish Investment Closed-End Fund actually spots a higher premium today than the end of May suggests that investors have not totally thrown in the towel yet. Looks like this will get worse before it gets better.

The Istanbul market is only a buy in a true panic situation - and this probably won't happen until the TKF starts trading at a discount.

[rffrydr]

Regional coverage is make-believing this is "as expected." Just the sunday meeting puts the lie to that.

I'm smelling good ol' american bonds, maybe as soon as next week on a 50point bell-ringer from the FED and big-time reversal. Safety first.

I'll have something ready for the event if it happens. Turkey is where the grand European project broke down last year (for Cultural reasons). This will bring a special aversion for the European emerging investor. What the Japanese were thinking.....

[HenryTo]

There has been talk in the past to set up an ETF based on the 20 most liquid stocks on the Istanbul stock market:

http://www.djist.com/downloads/DJIST_INFO.pdf

Where did that go? There is now no trace of such an ETF whatsoever.

Alternatively, one can invest in the Turkish Investment Fund (TKF) - which still trades at a 24% premium to its NAV:

http://www.etfconnect.com/select/fundPages/global.asp?MFID=3857

[HenryTo]

Thanks rffrydr - I sense a trade coming... do you?

Henry

[rffrydr]

Turkey hikes 225bp. It's not over, over there:

http://today.reuters.com/business/newsarticle.aspx?type=tnBusinessNews&storyID=nL25661810&imageid=&cap=

[rffrydr]

I've been hearing that (current account surplus, no long-term/short term debt imbalances) all the way up. This, as much as the overarching growth story, has gotten us to where we are. And it's still a long way down.

My instinct is that all this proves is that the imbalances never strike in the same way in the same place twice. Irony, an indicator not to be neglected, might suppose that the account imbalances this time strike the mother ship, good 'ol USA. And where the world's market goes, the world goes. Been there, done that in in China turn-of-the-century and account imabalences had nothing to do with it.

I've liked the India story since '92. And paid for it several times. The Enron power story was the final straw, keeping me out of the eventual big-time rally. I tried buying Japan tech during our bubble--went nowhee. But was it real or was it money? Both, of course, but funny how linked Sensex is to Jap. money--said to be the biggest investors.

There's still a greater trend emerging: a cultural/religious split. Globalization may already be listed a casualty.

That Maudlin was so able to put his finger on cause vs. symtom in our particlular reference with such a broad stroke is invaluable. Whatever way we choose forward. With the prospects of BOJ holding off the brake until Christmas I'm inclined to buy something too. But not the US Consumer.
_________________
Today is the Tomorrow you worried about Yesterday!

[HenryTo]

Yes, but Mr. Mauldin is late to the game - not usually but probably so in this instance.

Out of sheer luck, we started mentioning the deteroriation of the Japanese monetary base more than a few months ago, didn't we?

I wonder what Mauldin would have to say about this: http://www.bankcreditanalyst.com/public/story.asp?pre=PRE-20060609.GIF

And Morgan Stanley is still betting big on countries such as India and Russia - even as the fundamentals of those countries remain shaky relative to other emerging markets.

[rffrydr]

Latest Maudlin piece summarizes excellently:

http://www.2000wave.com/article.asp?id=mwo060906


Comparative chart of Japanese monetary base may be the most important we've seen.

In hindsight that G-7 meeting looms large.

[rffrydr]

Turkey raises rates, Thailand raises, Korea raises, Inida raises EU promises more. That last G-7 meeting is starting to loom larger.