PrimeRates Market Talk: India, Tapering, Syria

Written by: Jack Boylan

In what might otherwise be a quiet week, there seem to be plenty of market catalysts with potential to make their mark. The week before Labor Day is traditionally a time period that can be chalked up to the dog days of summer. Quiet trading, very little interest and just a general feeling of relative relaxation is the typical mood for the coming week. But the real world may disrupt the planning as some serious issues are outstanding.

There are some of the usual suspects in the data department coming up including durable goods (update: bad), mortgage applications, housing starts and consumer sentiment. All will be watched closely, of course. But what really seem to concern the street is the other possibilities. The possible bombing of Syria would have to be front and center of the worries. It appears as of this writing that the West, or at least the U.K. and U.S., feel boxed in on the mess and are ready to let some missiles fly. That would be more than enough for any month let alone week, but there are other matters on the minds of investors as well.

European stocks are trading lower to begin the week in addition to the continued weakness of India’s rupee. Italy may be standing out the most though as the trouble seems to continually pop up there like clockwork. Another “snap” meeting of government officials has more than a few worried.

Meanwhile, international unease with all of this “tapering” talk has hit a bit of wail at this point. As you might imagine, many countries are getting a touch sensitive on this topic:

Amid such concerns, IMF Managing Director Christine Lagarde warned that financial market reverberations “may well feed back to where they began.” She proposed “further lines of defense” such as currency swap lines.

It’s hard not to at least see her logic here. Although it is couched in bureaucratic gobbledygook, as in “feed back to where they began”, it isn’t too obscure as to mistake its meaning. Roughly translated she is saying that the world economies will collapse with any tapering actions. Now, that very well may be but not many investors are going to take anyone’s word from the IMF. More importantly, investors have been worried about this scenario sine the very first QE (quantitative easing) program began. Still, it doesn’t help soothe markets. that international economists are practically in a full panic about the possibilities.

It could be a bumpy, bumpy week. Even if you are enjoying your vacation, it may be impossible to ignore everything in the news. Either way though, the official start of the fall trading season begins in a week and you can be sure there will be many of the same (and some new) worries to be dealt with then. Have a good week!


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PrimeRates Market Talk: India, Tapering, Syria

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