Cashin: Traders reduce risk on Friday

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January 24, 2014

You made the case to both kelly and me a little over an hour ago why we could see an ugly close here today. why? well, ordinarily friday is the best day of the week. shorts tend to cover going into a weekend, but this is different because today we're worried about currencies, and nations use weekends to adjust their currencies. they usually do it on a sunday when no one around. so it triggers a run for cover in the meantime.

they want to reduce their risk profile going into this for fear that one, two, or four medications (he said nations)may adjust their currency over the weekend.

we're talking about not specifically but some of the countries that have been a concern this week, argentina. you can go back to some of the eastern european countries, maybe some of the asian names last time around that were a worry, art. is it discriminant or not? is there a sense of who or where to look? well, i think it is -- the difficulty is the possibility of contagion, and you're seeing a couple things. you saw the slowdown in china, the concern about their banking system, and we saw that spread through the copper and other commodity areas.

now, today it's interesting. we are certainly getting a slam bang sell-off, but five stocks in the dow provide about 40% of the sell-off, and they are names like caterpillar and boeing and united technologies -- the high dollar stocks. they're not only the high dollar stocks, but this five are a group who do a lot of business with emerging markets. overseas, exactly. assuming we close below 1800 on the s&p, what does that mean? well, i think it means that the bulls are going to have to do a lot of work to get things back in order. that's some serious damage. next week will be critical. you have the fed meeting. i lean on the side of at least very active discussion. they're going to take a look at these markets and say should we move further? janet yellin does not like disruption historically, so it will be interesting. it will be her maiden voyage, so to speak. we'll find out what happens.

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[ltr]Wave falling emerging market currencies, central banks have to intervene[/ltr]
[ltr]January 24, 2014

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[ltr]LONDON (Reuters) - Central banks intervened in the developing world in the currency markets on Friday, in an attempt to stabilize the currencies fall in value rapidly losing streak ridden emerging markets.

The Turkish lira plunged to record levels despite the intervention of the central bank in the foreign exchange market which spent three billion dollars during the previous session.

 And ranged from the Russian ruble and the South African rand around levels not seen since the financial crisis in 2008 and 2009.

Said Ulrich to Echtman, head of foreign-exchange strategy in the emerging markets bank 'Commerzbank' in Frankfurt, 'It's a general weakness of the currencies of these emerging markets - the ruble and the rand and the lira as traders believe that Albounk Central will take appropriate action in the face of market weakness.'

In Turkey rejected the central bank to raise interest rates, with the value of the pound fell more than 9 percent this month, which stoked fears of rising inflation and the exodus of investors.

The Bank has adopted instead on the establishment of bids to sell the dollar, and yesterday I resorted to what analysts see as the first direct intervention since early 2012.

Despite those sales, which is estimated to have amounted to about a dozen in total reserves of the Turkish currency fell worth about two percent to descend below the level of 2.30 lira against the dollar is important.

Foundation said 'RSS. Me. Feed' in a note to its customers 'It (the Turkish central bank) does not have enough firepower to combat the pressures on the pound'.

He was quoted as saying 'he exhausted tools refrain from raising interest rates will be the next major procedure is to make a direct increase in lending rates.'

The Turkish lira is only one of many currencies tumbled under pressure from investor concerns about China and the possibilities of reducing the U.S. monetary stimulus measures, which are expected to be this month, and may affect investment flows to emerging economies.

It is believed that he was among the central banks that intervened to defend their currencies on Friday Banks India, Taiwan and Malaysia.

 The Russia again, move-by-step adjustment range of the ruble, after it had sold 350 million dollars of hard currency.

Despite all this there was no lull breathtaking in the markets yesterday.

Indian rupee has tumbled and Albrezle rial and Russian ruble and South African rand are all more than one percent against the dollar. And recorded Russian currency also hit a record low against the euro.

Said Lars Christensen, chief emerging markets strategist at Bank 'Danske' Copenhagen 'I think we may see some action on the part of central banks will try to understand the extent of the wave decline is unlikely to be able to stabilize the currency.' He added that the weakness of the currency will ultimately be in favor of growth, but the pain will be severe.

The data showed Foundation 'E.. Me. F.. Global R' sent to clients late on Thursday that emerging markets saw the exodus of investors. Came out about four billion dollars of equity funds in emerging markets so far this year. And witnessed the week ending twenty-second of this month, down by 2.4 billion dollars, for the third week in a row of losses.

The bond funds are more flexible because they have seen during the week out just $ 0.4 billion, but they also lost a billion dollars so far in 2014.


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