American markets tumbled on the back of disappointing jobs data,
a gloomy growth outlook, and nervousness going into European
elections this weekend.
[caption id="attachment_59138" align="alignright" width="300"
Stefan Wagstyl discusses the effects of poor US jobs
numbers on EM and crude in the
In the wake of underwhelming jobs data, U.S. markets sold off
precipitously, with the Dow Jones, NASDAQ, and S&P 500 indices
all down more than a percentage point. The price of Brent crude (
) slipped 3% in Friday trading, for a total 6% loss over the past
three sessions. The slip in crude to more reasonable levels will
have a discernible effect on the
economic health of a number of emerging
. Net importers of crude like South Korea (
) and Turkey (
) stand to benefit, while economies heavily reliant on the
production of crude, like Russia (
), may suffer.
talks about Bayrou's snub of Nicolas Sarkozy in their Elysée
Although French centrist candidate François Bayrou was
eliminated in the first round of French Presidential elections, his
role in the second-round cannot be understated. Ideologically
placed in between the two second-round challengers, Nicolas Sarkozy
and François Hollande, Bayrou is in position to make an
election-deciding endorsement. This week, the candidate has voiced
his support for Hollande's candidacy, although he has stated he
will not call on his party to vote for the Socialist candidate.
Even in spite of the lack of a full-fledged backing, Bayrou's
decision is a blow for Sarkozy's candidacy capturing the centrist
vote is seen as key to his re-election hopes.
Buttonwood looks into the extent of Europe's problems
"The composite figures for the European economy, released this
morning, show that the picture is even worse than first thought,"
claims the British newspaper.The final numbers of European PMIs
came in even lower than the flash estimates, with Spain (
) and Italy's (
) numbers being particularly dreary. Given that the German (
) PMI is still above 50, it remains to be seen if Europe's largest
economy will relent and consent to growth-promoting policies.
Joe Leahy describes how Brazil is moving to lower
interest rates in
The Financial Times
Brazilian President Dilma Rousseff has lowered the guaranteed
rate of return on special savings accounts, known as
. A reduction in these rates, currently at about 6%, is seen as
crucial to decreasing overall interest rates. If Brazil (
) were to continue to cut interest rates without lowering rates on
, economists fear that demand for bonds would dry up as people
moved more money into these high-interest rate savings vehicles. A
decrease in the
thus allows the Brazilian central bank more monetary policy
flexibility; however, lingering concerns over inflation could
impair the efficacy of these maneuvers.
Disclosure: Author's immediate family is long EWZ