Little Bunny Foo Foo

I've begun this post with that title of a nursery rhyme for two reasons:

First, the moral of the nursery rhyme is "Hare today, Goon tomorrow". Way back in 1982, the first time we moved to Guam, my wife needle-pointed a pleasant picture of a contented rabbit, underwritten by the phrase, "Hare today, Guam tomorrow."

And now, after 17+ years in the burbs of Sydneytown, we're about to do it again. The Sydney house is sold, the Guam apartment is bought, the cat (little does he know) gets exported in a couple of weeks, and the movers will descend by the end of the first week in June. So, up goes the needlepoint, back on the kitchen wall.

So that is the story behind the lapse in posting of late, and is the explanation for the spotty, if any, posting I'll be able to get done for the next 2 months. Please hare with me, check in from time to time, just sit down and browse throught the archives like you were sitting in the dentist's office, run up my hit-o-metre, and your regular programming will resume shortly.



But the second reason for alluding to Bunny Foo Foo is that the Bunny was not really a nice guy. He was having one of those Bad Hare days, and the Blue Fairy was none too pleased, because what he was doing was rather indiscriminately running through the forest, scooping up the field mice, and bopping 'em on the head.

And the market in recent weeks has been running through the commodities and emerging countries, picking up the traders and boppin' 'em on the head. He scooped up the rational traders who thought too early things were due for a retracement, then stopped suddenly and retraced just about the time folks were really piling on the commodity band wagon. (See, e.g., Can't cop it any more.)

Along the way, all that wayward money had a field day boppin' those Arab Gulf States market traders on the head.

Yesterday, Reuters was reporting,

"Indian police are watching out for possible suicides by brokers and investors after a steep market slide wiped out billions of dollars in share values. Policemen were keeping a watch near lakes and canals, possible places where people in distress could head to kill themselves. They said rescue teams were on alert. "A financial crisis can trigger suicides. We are just trying to prevent them."

"Gold has turned into brass. We are finished," said S.S.Gupta, a middle-aged Mumbai broker who said he had lost millions of rupees in two hours of trading on Monday morning. Ahmedabad is considered particularly vulnerable to stock market volatility. With over five million retail investors, the city is one of India's main trading hubs where people have put in millions of dollars of their disposable income into the stock market.

"I borrowed money to trade in the market. I lost it all in the past two days," said 37-year-old Sanjay Joshi, a small investor. "I don't know how will I repay my loans."

Bloomberg is reporting today,

"Russian stocks, which doubled in the past year, may be among the biggest victims of the current turmoil in emerging market stocks.

The Russian Trading System Index slid 25 percent since reaching a record May 6, including a 9.1 percent plunge yesterday. Oil producer OAO Surgutneftegaz and steelmaker OAO Nizhny Tagil Iron & Steel Plant led the drop.

Investor concerns over slowing economic growth also prompted declines in the prices of oil and metals, Russia's main source of export revenue. Surgut, Siberia-based Surgutneftegaz, the country's fourth-biggest oil producer, has lost 37 percent since stocks peaked May 6. Nizhny Tagil, a unit of Moscow-based Evraz Group SA, has fallen 21 percent.

Crude oil has slipped 8.7 percent since it climbed to a record $75.35 on April 21 and April 24 in New York. Oil prices are still up 12 percent this year. Since reaching records this month, copper has lost 12 percent, nickel is down 5.2 percent and zinc has slumped 17 percent.

Moscow brokerages Alfa Bank, Aton Capital and Deutsche UFG, the Russian unit of Deutsche Bank AG, all wrote in reports last week that shares had become too expensive and might fall another 5 to 10 percent. The RTS has lost 17 percent since then.

Russian stocks trade at about 13.5 to 14 times forecast earnings for 2006, Alfa Bank estimates."

Mineweb.com reports,

The fierce sell-off in global markets continued with a vengeance on Monday, as global portfolio flows continued to target, in particular, resources stocks and global emerging markets, of which South Africa is one.

The broadest measure of performance on the JSE, the all share index, shed 2,8% on Monday, led down by huge blue chips such as Anglo American (down 5,4%), BHP Billiton (down 2,4%), AngloPlatinum (down 6,8%), Impala Platinum (down 7,1%) and Gold Fields (down 5,4%).

The selling, however, was not confined to resources by any means, as investors lightened heavily among other blue chips, such as Standard Bank (down 5%) and FirstRand (down 5,9%). There was also broad profit taking among other sectors.

According to statistics from Morgan Stanley Capital International, South Africa is one of the world’s biggest losing equity markets in the month of May, to date. Eclipsed only by Turkey, Colombia and Argentina, South African stocks have fallen by more than 13%, measured in dollar terms, so far this month.

Another Reuters report out of South Africa said,

" Gold exporter South Africa's rand fell 1.7 percent, after hitting a 6-month low against the dollar, knocked by a sharp fall in commodity prices. That is also seen denting assets in major exporter Latin America.

The Turkish lira fell 1.7 percent in after hours trade from Thursday's close, as investors thought the likelihood of early elections -- considered a risk to fiscal discipline -- had increased amid an escalation in political tensions.

After a market holiday on Friday, Istanbul's main stock index fell 7 percent, down some 24 percent from its peak this year, and weaker than its 2005 close.

Emerging market debt prices fell again on Monday, with the yield on the Turkish lira-denominated benchmark April 9, 2008 bond hitting a fresh record high for 2006 of 15.97 percent in Tuesday-dated trade.

Turkish foreign currency-denominated debt also fell faster than other emerging market paper, traders in London said.

"At the moment they're submerging, not emerging," one emerging markets trader in London said."

And down South of the Gringo border, things were also tough, as BusinessWeek reports:

Major Latin American stock markets and currencies weakened sharply on Monday as international investors fled emerging markets amid worries over rising U.S. interest rates.

Traders said investors were withdrawing funds due to speculation over accelerating inflation and rising interest rates in the United States.

The Brazilian real had the largest single day slide in three years on Monday, closing at 2.3 to the U.S. dollar, compared to 2.2 to the dollar at Friday's close, a 4.3 percent decline.

It was also the real's lowest close since Jan. 19, after rising to five-year highs only two weeks ago.

Meanwhile, the benchmark Ibovespa index of the Sao Paulo Stock Exchange closed 3.3 percent lower. The exchange closed at 36,497 points, compared with 37,733 points at Friday's close.

Mexico's stocks were also sharply lower Monday in the broad sell-off of emerging-market equities as investors shied away from higher risk holdings.

The market's IPC index of leading issues was down 3.5 percent, or 694.76 points, at 19,487.38 in midmorning trading. Mexico's peso softened, trading at 11.2970 to the dollar compared with 11.1890 at Friday's close, a weakening of about 1 percent.

Chile's benchmark IPSA stock index was off about 1.2 percent, while the Chilean peso weakened 1.5 percent against the dollar.

Argentina's Merval stock index gave back 5 percent, while the Argentine peso also weakened 0.6 percent against the greenback.

And today on the Australian markets, the ASX200 is putting on a might battle to stop a vicious 400 point sell-off that started when the index hit an all-time high just over 5400 about 8 trading sessions ago. With 2 hours left to go it's down 2 points on a day that has seen it repeatedly see-saw back and forth past the red line marking yesterday's close.



So that market Bunny Foo Foo has been really busy boppin' those field traders on dey heads. Not that it has bopped much sense into them, because they are just such an optimistic bunch these days.

According to that Reuters report above about the Indian meltdown, the emergent Indian market would re-emerge shortly: "It seems overdone and the market should stabilise during the second half of this week," said Rajat Jain, Chief Investment
Officer, Principal Asset Management Company Pvt Ltd."

And in Russia, "Some investors see further gains ahead. Optimism about global demand for oil will attract investors to the market again, said Jack Arnoff of Pictet Asset Management in London. Russia also is in its eighth year of economic growth, boosting consumption and lifting earnings of food retailers such as Pyaterochka Holding NV and phone companies such as OAO Mobile TeleSystems, eastern Europe's biggest mobile operator."

And Brazil wouldn't be too long away from the party. " Rogerio Poppe, senior equity fund manager at Mellon Global Investments Brazil, said she did not believe Brazilian markets were pressured by local factors including last week's outbreak of violence in Sao Paulo, the country's financial and business capital, where clashes between police and an organized crime group left 172 people dead. "In truth, we're suffering from external factors there's been a strong movement away from emerging markets. I think it's just a hiccup, it will pass, by it may take awhile," Poppe said."

For more optimism, tune in to CNBC.