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Volatility in 2012: Will It Linger Longer?
Tuesday, January 17 2012 | 10:18 AM
NEWOAK CAPITAL LLC
|While European woes have led to investors’ fears and market volatility, a host of other hazards pose potential dangers. Despite the US markets recent positive trends in GDP and employment, key uncertainties remain: housing market, foreclosures, budgetary political impasse, tougher regulations and legacy mortgage litigations. We should not forget that several trillion in planned budget cuts are still ahead. The impact of the slowdown in BRICs, jointly due to the European crisis and their own natural economic evolution, may not be compensated by the US economy and emerging markets.
The potential in rapidly expanding BRICs’ credit markets, particularly in China, should be watched. As an example, the first domestic AAA default in China had the potential to send shockwaves through the Chinese economy but was cured by the bond guarantor. The Arab Spring, Egypt’s election, and potential Iranian blockade of Strait of Hormuse are still looming.
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Cheeseburgers, KFC & Copper
Friday, February 04 2011 | 04:25 PM
|No doubt we have to credit the Chinese growth story for the big 2010 gains in the North American stock markets. The broadest measure of U.S. equities, the Dow Jones Total Stock Market Index (formerly the Wilshire 5000) gained 15.34% in 2010, or approximately $2.3 trillion in market capitalization. The index has gained 44.99% since 2008. Most notable was the index gain of 23.35% during the third and fourth quarters.
Investors in the commodity space were the big winners with the price of crude, gold, silver, cotton, copper, uranium and potash all soaring in response to the China story.
Our chart displays two direct beneficiaries of the China story – the big fast food players McDonalds (MCD) and YUM Brands (YUM). Look at the price action over the past several weeks – down is the face of a late December rally the took most of the broader stock indices to 52-week highs. Clearly these Chinese consumer bellwethers are predicting a Chinese slowdown – if you love the copper / Chinese story MCD & YUM may give you indigestion.
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