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With hedge fund manager, CNBC regular and long-time veteran of the Russian markets Tim Seymour at the helm, Emerging Money (http://www.emergingmoney.com) provides education, trading analysis and comprehensive views of emerging markets around the world. As economies in the BRIC group and beyond... More
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  • DXY still winning safe haven bids

    With Korean war threats and European Union sovereign failures still very much on the front burner of global news flow, the dollar index is now almost 6% off its lows.

    Early Friday, the DXY index was up another 93 basis points at 80.40, up 5.91% from the 75.91 level it touched on November 4 -- just three short weeks ago.

    Since then, the Irish bailout and rumors of a similar arrangement looming on the horizon for Portugal or even Spain have pushed the euro back onto the defensive, while renewed artillery shelling from North Korea has unnerved traders in the Pacific Rim.

    From here, the 200-day resistance line is in sight. Just a 1.7% push up from here, perhaps on a formal declaration of war between the Koreas over the weekend, would take the DXY index up beyond 81.77 trend line, converting current resistance into support and establishing a new upward trend for the dollar.

    This, in turn, would push commodity prices in particular lower in a natural reverse move. (As commodities are traded in dollar terms worldwide, a stronger dollar translates into weaker effective prices on everything from grain to gold.)

    Make no mistake: The dollar is not rallying here on strength in the labor market or a more robust U.S. retail environment. This is purely rooted in geopolitical factors.

    Still, meanwhile, we seem tilting toward the "risk off" side of the world in the immediate term. Less UDN (quote), more UUP (quote).

     

    Disclosure: no positions
    Nov 26 12:04 PM | Link | Comment!
  • China looking to tax coal price spike

    Coal is another commodity that is spiking amid a weaker dollar and surging global demand for fuel. The Chinese market is especially robust, but Beijing may be trying to get a piece of that action.

    The price of heating coal has spiked 10% in China since September, largely due to exchange rates and traders' bets that next winter will be cold -- possibly as cold as last year's twice-a-century cold snap that brought snowstorms deep into the heart of southern China.

    Analysts are looking for another 7% increase by the end of the year, which would push coal prices well above the record of $127 a ton hit last January.

    Meanwhile, Beijing is looking at boosting its tax on coal sales to somewhere in the 3% to 5% range from the currently minimal 1% it now charges mining companies.

    Although this is nothing like the "super tax" that Australia is seeking to impose on local mining companies there, it will definitely challenge Chinese coal company profits if implemented.

    It is more likely that miners like YZC (quote) will simply pass on the added cost to power plant operators, which will have to absorb the surcharge without passing it on to their heavily subsidized subscribers.

    In the meantime, a strong coal market is definitely a plus for YZC. 

    Disclosure: no positions
    Tags: YZC, China, coal, energy
    Nov 21 1:25 AM | Link | Comment!
  • Emerging Markets week in review; inflation, sovereign debt in Europe

    Emerging markets traders spent much of this week reacting to a steep decline in the Chinese stock market, which is often considered a leading indicator for security prices throughout the emerging world.

     

    Still, although the losses in Shanghai were occasionally on the harrowing side, many emerging markets -- notably commodity exporters like Brazil and especially Russia -- came into their own as traders adjusted to the new prospect that inflation is alive and well.

    Fear about Ireland needing the European Union to spend $100 billion or more to shore up its finances kept currency markets on edge. Although the dollar seemed technically due for a correction, nervous traders initially piled into the U.S. currency in order to hedge their euro risk. However, by Friday, Irish fears had at least temporarily evaporated, encouraging a new flight back to risk assets like the euro, commodities and emerging currencies.

    Brazilian shares were one of the net winners, edging up 0.7%. Traders in Brasilia largely reacted to macro developments, leaving the Bovespa swinging as the risk gauges flipped. Commodity producers, which have more to gain from an upswing in global inflation, fared best.

    Russian shares gained 2.8%. Neglected in previous weeks, Moscow welcomed the bulls back with a vengeance. Not only is Russia a center of the global commodity trade -- producing everything from nickel to oil in vast quantities -- but market legend Jim O'Neill gave the market a fundamental endorsement by calling these stocks "cheap."

    Indian stocks fell 2.9%. With relatively few strategic commodity plays of its own, Mumbai is largely at the mercy of inflation. Still, if India raises interest rates to fight inflation, it may paradoxically lure yield-hungry capital flows into the rupee, setting off a chain reaction that sends the currency soaring and starves local exporters of their ability to compete overseas.

    Chinese markets ended the week down 3.2% after falling nearly 10% in early trading. After coming so close to the precarious technical correction level, Shanghai is still a bit fragile, although many traders have flocked back to the market to grab what they see as bargains. Meanwhile, Beijing plots its next anti-inflationary campaign; moves could include price controls, lending curbs or an outright interest rate hike. 

    Disclosure: no positions
    Nov 20 6:50 AM | Link | Comment!
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