Friday, April 02, 2010

Emerging Market Stock Market Rally; 19 Mo. High

The MSCI Emerging Markets Index has increased six straight days, by a cumulative 6-day percentage increase of almost 4%, and reached a new 19-month high today of 1028.5, the highest closing value since August 1, 2008. From the lows last year of below 500, the Emerging Markets Index has more than doubled to levels now above 1,000.


At 4/03/2010 1:59 AM, Blogger Ron H. said...

This comment has been removed by the author.

At 4/03/2010 12:59 PM, Anonymous gettingrational said...

Prieur du Plessis writes, at Seeking Alpha, the best country performer last quarter was:

Estonia with a gain of +44.7%!

The worst country performer:

Bermuda with a loss of -32.2%

At 4/03/2010 6:02 PM, Blogger Craig Howard said...

If the stock market truly reflects the economy, then there's little reason for its ebullience. If, on the other hand, the stock market presages future economic growth, then, indeed, good times are coming.

Of course, the stock market's current levels may only reflect the money that the Fed has pumped into the banking system which -- absent lending growth -- needs to find a home somewhere. If that's the case, then it's bubble time again!

At 4/03/2010 8:04 PM, Blogger PeakTrader said...

Craig, according to the BEA, U.S. real GDP contracted 2.4% in 2009, after expanding only 0.4% in 2008. The stock market has been rebounding on stronger real growth, e.g. 3% in 2010.

Also, there's an inverse relationship between wages and profits. I suspect, real wages will be depressed, which will boost profits.

If there's a "bubble," it'll be much smaller than the 1995-00 and 2002-07 bubbles. We had more of a production bubble in the '90s and more of a consumption bubble in the '00s. There should've been more of a production than a consumption bubble in 2009-14. However, government drained too much money out of the economy and squandered it.

The massive inefficiencies built into the system over the past year may lower U.S. living standards, substantially. There may be fewer and smaller real assets and goods (e.g. using more inputs to produce output), along with higher prices, interest rates, and taxes.

At 4/03/2010 8:24 PM, Blogger PeakTrader said...

Also, regarding one of your prior comments. It doesn't seem possible to accumulate capital without consumption (even someone stockpiling logs for his fireplace in the winter has to consume the forest). The U.S. is the world's only superpower, because of the capital accumulation from its consumption.

At 4/03/2010 9:49 PM, Blogger bobble said...

another viewpoint

death cross in china

At 4/03/2010 11:18 PM, Blogger PeakTrader said...

Bobble, here's another viewpoint:

Contrarian Investor Sees Economic Crash in China
New York Times
Published: January 7, 2010

SHANGHAI — James S. Chanos built one of the largest fortunes on Wall Street by foreseeing the collapse of Enron and other highflying companies whose stories were too good to be true...He also spotted the looming problems of Tyco International, the Boston Market restaurant chain and, more recently, home builders and some of the world’s biggest banks.

Now Mr. Chanos is betting against China, and is promoting his view that the China miracle has blinded investors to the risks in that economy.

As most of the world bets on China to help lift the global economy out of recession, Mr. Chanos is warning that China’s hyperstimulated economy is headed for a crash, rather than the sustained boom that most economists predict. Its surging real estate sector, buoyed by a flood of speculative capital, looks like “Dubai times 1,000 — or worse,” he frets. He even suspects that Beijing is cooking its books, faking, among other things, its eye-popping growth rates of more than 8 percent.

“Bubbles are best identified by credit excesses, not valuation excesses,” he said in a recent appearance on CNBC. “And there’s no bigger credit excess than in China.”

“The Chinese,” he warned in an interview in November with, “are in danger of producing huge quantities of goods and products that they will be unable to sell.”

At 4/04/2010 4:11 AM, Anonymous gih said...

That's good for the people staying in that country. But in our country, the economy still flactuating. That's why I myself decided to migrate into other country with governance and economy wise.


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