The art of economics consists in looking not merely at the immediate hut at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups—Henry Hazlitt
Tuesday, February 04, 2014
Asian Risk OFF Day: Japan's Nikkei Dives 4.2%, Singapore’s STI Breaks Support, Yields of Indonesian Bonds Soar
Tuesday, August 20, 2013
ASEAN Meltdown: Indonesia’s JCI in Bear Market, Thailand’s SET and Malaysia’s KLSE Clobbered
The Philippine peso (USD-Php) was significantly lower in the global spot currency markets, despite today’s extended flood and weather related suspension of school and offices.
Tuesday, March 15, 2011
Black Swan Moment: Nuclear Safety Concerns Hammer Asian Stocks
There is an ongoing meltdown in Asian stock markets spearheaded by Japan, as of this writing.
charts from Bloomberg
Before I get “I told you so” quips from perma bears, the reason this has been happening, according to media, has been principally about nuclear safety issues and hardly about debt or other mainstream issues.
According to the Los Angeles Times,
Panic selling looked like it was spreading across Asian financial markets on Tuesday after Japan warned of rising meltdown risk at the crippled Fukushima nuclear reactor complex.
The Japanese stock market’s Nikkei-225 share index was down a stunning 1,275 points, or 13.3%, to 8,344 at about 9 p.m. PDT, with about two hours to go in the trading session.
Of course, because of the state of panic, many other chain effects such as the impact on fiscal conditions or credit (default risk) concerns or economic growth will also be attributed. It's people instinct to add causal linkages, even if they are irrelevant, mostly for social signaling purposes (intellectual strawmen).
Let me add that perhaps fears of contagion from radiation leaks may have also affected Japan's closest neighbors which may have also prompted for a domino effect dynamic throughout the region.
So yes while we may be seeing a blackswan moment (low probability, high impact event) triggered by nuclear safety issues (which apparently no one has seen or predicted), for me this looks more like a knee jerk reaction rather than a strong case for structural reversal.
Here’s my guess, after Japan has expanded their engagement on their version of a Quantitative Easing (QE), expect the US to shift rhetoric from the farcical “exit” strategies to QE 3.
Japan’s disaster has just given the US Federal Reserve a crucial excuse or justification to undertake extensions of their money printing operations or ‘credit easing’ policies.
While I am not sure about the ECB or BoE, I am inclined to think that they might join the bandwagon too.
Tuesday, January 26, 2010
Successful Bond Raising Dispels The Greek Debt Crisis Myth
Greece successfully raised funding on the debt markets on an oversubscribed basis.
This from the Timesonline,
``Concerns over a possible debt crisis in Greece eased yesterday after huge demand for the Greek Government’s first bond issue of this year.
``Greece had planned to sell €5 billion (£4.4 billion) of new five-year bonds to investors, but, after about €25 billion of demand emerged, it decided to issue €8 billion.
``The auction had been seen as a key test of investors’ appetite for Greek government debt and was heralded as a triumph by the authorities in Athens. “There was a lot of interest,” Spyros Papanikolaou, head of Greece’s public debt management agency, said. “This proves the trust [that] investors have in Greece’s economy. Greece [has] proved [that] it can raise the funds it needs for 2010 without a problem.”
The Greece Athex Composite rallied 2.8% as shown below from Bloomberg, in spite of the sustained pressures on the European and Asian markets.
While the uncertainty over Greece's debt problems haven't been entirely resolved, the successful bond issuance serves to validate our thesis that the PIIGS problem isn't the likely cause of the current stock market pressures, as discussed in When Politics Ruled The Market: A Week Of Market Jitters.
For the mainstream, it's more about the available bias or seeking of any available event that could be imputable to market action.