Here is another demonstration of how massively disconnected the stock markets are with conventional fundamentalism (e.g. economy or earnings)-which is the reason why many "experts" have been utterly perplexed.
Russia's RTSI had been one of the top world performers for 2009 and produced 129% in local currency gains!
The conventional thought have been that stocks function as forward looking indicators for the economy with about a window of 4 to 6 months ahead.
Yet the Russian economy has wobbled ALL throughout last year as shown below from US Global Investors.
According to US Global Investors, ``Russian GDP contraction is estimated to decelerate to -5.3 percent in the fourth quarter compared to -9.8 percent in the third quarter. The beginning of economic recovery as well as the base effect means a substantial upside to 3-4 percent growth estimate in 2010."
The RTSI spiked by another astounding 8% this week!
More.
In our recent post, Venezuela's Path To Hyperinflation we noted that despite the recent crisis-massive devaluation and electricity rationing-Venezuela's stock market benchmark, the IBVC, soared by a whopping 10.85% this week!
No, it isn't that Venezuela is immune or crisis proof.
Instead it is likely that we are witnessing accelerated signs of the demonetization process or the trajectory towards hyperinflation.
Bottom line: the common denominator appears to be massive inflationism and how these has mangled economic calculation and has thus resulted to unexpected volatility.
No comments:
Post a Comment