This was the 2nd day in a row. First it was China, their slowing GDP and contracting factory index, today, it was bad news from other emerging markets …. sharp drops emerging markets including Argentina, Turkey, Russia and South Africa.
Oh, yeh, and also rumors of another announced reduction in the QE of the Fed.
Personally, I think it has much more to do with the QE than anything else. No one really cares about Argentina, or that Turkey’s currency is crashing. Russia and South Africa will be fine in the short term and most likely in the long term. What we’re seeing is a withdrawal of money from the speculative markets. If there’s enough capital, you will always see money go to more risky ventures. Adding more risks only adds to greater potential payout. It’s the dreaded thought that our Fed will quit printing money is what has people scared. Now it is, more risk, and less capital to risk it with. But, that’s just me.
In visions of past absurdities, we see Greece and the troika are still arguing over terms of Greece’s capitulation from being a free state. No, no, market lemmings, there’s no reason to panic. Greece will continue to whine, and the troika will continue to support this failed economy.
Will the slide in the markets continue? I doubt it. If it does continue for a few days, there’s no way the Fed will cut their QE further. Likely, what they would do is pump more than their announced QE, as they did in the past.