Markets Finally Acknowledging The Dollar (SPY, UUP, EFA)
Tim Seymour: The dollar’s (NYSE:UUP) recent counterstrike out of a deeply oversold position is causing significant pain around the world. Here we go.
It is actually surprising that it took traders as long as they did to acknowledge the extent of global weakness out there and shift back out of risk assets to the dollar.
The question is which is the dog here and which is the tail. As the dollar rises, commodities and other speculative trades implode, pushing money into safer havens. And as the risk of slower growth — or even a growth shock — ahead rises, the dollar starts to look even better.
Today we are seeing breaks emerge in names that were trading well previously, especially in developed markets. Wall Street is opening below important technical levels — forget the minor numbers guys will be throwing around, the next key level on the SPDR S&P 500 ETF (NYSE:SPY) is 129.50.
Is this an options expiry hangover? Maybe, but it is more about complacency than anything.
Trouble for iShares MSCI South Africa Index (NYSE:EZA) with its heavily euro-centric component as well.
There has been a lot of bad news out there and the data points have been getting gradually weaker for three months now.
We said there was not enough fear in the markets yet. It looks like that situation may be correcting itself.
Emerging Money provides insightful and timely information about the increasingly important world of Emerging Market investments. CNBC Emerging Markets Contributor Tim Seymour leads the team of Emerging Money to bring you cutting edge global news and analysis.
About Tim Seymour: Tim is a founder of Emerging Money. He is a founder and Managing Partner at Seygem Asset Management, and The Emerging Markets Contributor to CNBC. Seygem Asset Management focuses on investing throughout the global emerging markets asset class. With a view that emerging and developing economies will continue to outpace the economic growth and advancement of developed economies, Seymour has devoted a career to investing in the dominant markets of tomorrow, today. Seymour’s career has included significant experience in both alternative asset management (hedge funds) and capital markets, having launched two hedge funds, and built the largest Russian broker dealer in the USA. Seymour started his career at UBS, focusing on international credit (cash, swaps, forex) in a specialized hedge fund group (New York). Seymour completed the firm’s training program after graduating with an MBA in international finance from Fordham University. Seymour received his undergraduate degree at Georgetown University.