Category: Your Money

How Asia Copes with America’s Zombie Consumers

Notwithstanding government life-support initiatives, US consumers seem headed for years of retrenchment. Consumption’s share of US GDP currently stands at a sharply elevated 70%. While that’s down from the high of 71.3% in early 2009, it remains fully four percentage points above the 66% norm that prevailed in the final quarter of the twentieth century.

Reversion to that earlier share is likely as American consumers make the transition from the insanity of the boom to the sanity required of the bust. That spells subdued growth in US consumption for years to come – with a predictably massive impact on global consumption. While the US accounts for only 4.5% of the world’s population, its consumers spend $10.3 trillion annually – by far the most in the world.

via How Asia Copes with America’s Zombie Consumers by Stephen S. Roach – Project Syndicate.

The changing landscape of India’s equity markets – the bots are here

About 60% of orders into the country’s main exchange are coming from co-located servers shows that high-frequency trading has come onshore in a big way. High-frequency traders tend to stick to liquid stocks and liquid derivatives contracts. Hence, they haven’t yet contributed meaningfully in enhancing liquidity of the other stocks and illiquid derivatives contracts such as stock options while greatly increasing the volatility of the most liquid names.

Combined with the dismantling of SEBI’s existing team, the market is at risk of being swarmed by the bots.

via The changing landscape of India’s equity markets –

BRIC Stocks’ Rally Seen Doomed as Interest Rates Rise

Rising commodity prices are “triggering second-round effects via higher wages,” Alain Bokobza, the head of asset allocation strategy at Paris-based SocGen, wrote in an April 11 report titled “The EM Party Is Over.” He recommends switching to developed-nation equities from emerging markets.

“In most emerging markets, you do have these margin pressures building,” Michael Shaoul, the chairman of Marketfield Asset Management in New York, who has been shifting investments to the U.S. from emerging markets, said in an interview. “We’re fairly convinced that this monetary cycle will end in some distress.”

via BRIC Stocks’ Longest Rally Since 1997 Seen Doomed as Interest Rates Rise – Bloomberg.