At the close of New York trading, the FTSE All-World equity index was down 4.1 per cent since the start of 2014, its worst January performance since a 4.4 per cent decline four years ago. On Wall Street, the S&P 500 fell 0.7 per cent on the day at 1,782 – leaving it 3.6 per cent down over the year so far, its first monthly loss since August.
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If the stock market were already crashing then it would be simple to blame the dismally sad rash of dead bankers in the last week on that – certainly that was reflected in 1929. However, for the third time in the last week, a senior financial executive has died in what appears to be a suicide. As Bloomberg reports, following the deaths of a JPMorgan senior manager (Tuesday) and a Deutsche Bank executive (Sunday), Russell Investments’ Chief Economist (and former Fed economist) Mike Dueker was found dead at the side of a highway in Washington State.Police said the death appeared to be a suicide.
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This time, the Federal Reserve has created a truly global problem. A big chunk of the trillions of dollars that it pumped into the financial system over the past several years has flowed into emerging markets. But now that the Fed has decided to begin “the taper”, investors see it as a sign to pull the “hot money” out of emerging markets as rapidly as possible. This is causing currencies to collapse and interest rates to soar all over the planet. Argentina, Turkey, South Africa, Ukraine, Chile, Indonesia, Venezuela, India, Brazil, Taiwan and Malaysia are just some of the emerging markets that have been hit hard so far. In fact, last week emerging market currencies experienced the biggest decline that we have seen since the financial crisis of 2008. And all of this chaos in emerging markets is seriously spooking Wall Street as well. The Dow has fallen nearly 500 points over the last two trading sessions alone. If the Federal Reserve opts to taper even more in the coming days, this currency crisis could rapidly turn into a complete and total currency collapse.
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It is important to note that gold has rallied since and despite the Fed’s taper in late December. It is also worth noting that the Fed’s printing of nearly $0.78 trillion a year or $65 billion a month to buy U.S. government debt remains extraordinary and shows how fragile the U.S debt markets and economy still are.
There is also the possibility that the emerging markets crisis impacts developed markets as was seen in the Asian crisis in 1998. In our vastly interconnected financial and economic world, the notion that there will not be knock on effects may be proven to be optimistic. The risk of contagion remains as turmoil in markets tends to be contagious.
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As more than half the nation has spent weeks in a deep freeze, the price of propane — used for everything from heating homes to powering farms — has skyrocketed, leading Washington lawmakers to question whether producers are manipulating the market.
The impact of record prices is particularly pronounced in rural states, where propane is more commonly used. In Colorado, residents saw prices nearly tripling in the past two weeks as freezing weather in the Midwest boosted demand on an already tight supply in the state. Since Jan. 16, prices have jumped to as much as $6 a gallon from $2.30.
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