FRIDAY 1/31/14; EOM

The NIKK did not follow the direction of the US and instead drops -0.6% to 14915, losing the 15K level, and starting the year with a -8.5% loss. Volume in Asian markets is light with new year celebrations in full swing. India’s central banker Rajan is taking the US to task for hooking the emerging markets on easy money but is now pulling the punch bowl away creating turmoil. Rajan says the emerging markets pulled the US out of the doldrums during the 2008 and 2009 financial crisis and now the US should extend a helping hand.

The US throws emerging markets under the bus as the QE tapering continues and views the current global turmoil as country-specific issues rather than contagion; namely problems in Argentina, Turkey, South Africa and Hungary. The Hungarian forint weakens due to off-hand remarks by officials and this ..........




[Text is Redacted: Purchase January 2014-01 to Read the Complete Chronology]

Emerging market funds experience the largest withdrawals since August 2011. The China slowdown places a drag on the global economy. Commodity currencies and countries such as Australia and Canada are hurt by the emerging market slump. The US dollar is stronger as money flows into Treasuries sending yields lower. Germany, the UK and even Japan bonds all experience a similar flight to perceived safety. India, South African and Turkey central banks raise rates to stop the currencies from collapsing but the situation remains tenuous. China and Japan tensions increase over the air space above the East and South China Seas.

The State Department finishes an environmental report that provides an all-clear signal to approve the Keystone XL oil pipeline project; however, President Obama continues to stall any progress. Keystone has been delayed for four years and would provide nearly 50,000 high-paying jobs. The president delays the project since he does not want to lose the voting support of the environmentalists that oppose the pipeline. The politicians, democrats and republicans, always place their own selfish interests ahead of the people.

The Obamacare web site problems continue. The president is put on the spot during an internet chat session when a lady in poor health describes extensive problems dealing with the new health care law. To create further embarrassment with the ongoing Obamacare debacle, House Minority Leader Pelosi, infamous for saying “we must pass the bill to find out what is in it,” appears on the Jon Stewart television comedy show and says ‘she does not know what went wrong, or what is going wrong with Obamacare, and it is not her responsibility’. Pelosi is made a laughing stock since obviously if she is clueless about Obamacare, than how can any American make sense of the new heath care law? The participation by young healthy folks in Obamacare is negligible so the taxpayers will have to bail out the insurance companies in the future.

A train hauling chemicals and fuel oil derails in New Augusta, Mississippi, forcing 50 people from their homes. White powder is discovered at hotels near the Super Bowl as well as the mayor’s office but the FBI tests the powder showing it is non-hazardous. The incident sparks fears that a deadly anthrax attack may have been in the offing.