This page has been archived and commenting is disabled.
"There Is Going To Be A Taper Tantrum In Latin America... It Is Inescapable"
Authored by Patrick Gillespie via CNNMoney.com,
Greece needs a bailout and China's stock market is in meltdown mode. But the global economy has another rising red flag: Latin America.
Every major Latin American economy is slowing down or shrinking. The World Bank predicts this will be Latin America's worst year of growth since the financial crisis. As if that's not dire enough, the world's two worst performing stock markets are in the region as well.
And things could get even uglier later this year for Latin America, a region which is double the economic size of India.
"The weakness in Latin America is reflecting the weaker global outlook," says Win Thin, senior economist at Brown Brothers Harriman.
The 'most vulnerable': After years of checkered progress, Latin America is the "most vulnerable" region to China's sputtering economy and market meltdown, experts say. It's become a trade battleground area between the United States and China.
China is the biggest trade partner to many Latin countries, but the U.S. has tried to reassert its presence in recent months. Still, China's sluggish growth is pulling Latin America down with it.
"We're expecting very, very weak growth," says Eugenio Aleman, senior economist at Wells Fargo Securities. "Brazil is in bad shape. Argentina isn't much better. Chile has slowed down to a trickle...Peru is slowing down considerably."
That's just the beginning. Venezuela is arguably the world's worst economy with sky-high inflation. Next door, Colombia has the world's worst stock market this year. Its index is down 13% so far this year. The second worst is Peru, down 12.5%. By comparison, America's S&P 500 is flat this year. (Argentina has the world's best stock market, but that's more a reflection of politics than economics).
While many are focused on Greece right now, "a deeper downturn in China remains the key external risk for Latin America," says Neil Shearing, chief emerging market economist at Capital Economics.
The big problem: The three "C's" are weighing down Latin America: China, commodities, and currency.
The region boomed last decade when its commodities, like iron, copper and food, were in high demand.
But China drove that demand. Now Chinese construction companies are pumping the brakes while the government tries to stop its bleeding stock market. That means less Chinese cash is coming to Latin American countries. Oil's tanking prices have hurt the region too.
And then comes currency. The U.S. dollar's strong rise this year has helped it gain a lot of ground on Latin American currencies. That makes it more expensive for Latin Americans to buy imports and, for some companies, more expensive to pay debt that's in U.S. dollars.
Colombia's currency has lost 13% of its value this year against the dollar. Brazil's real has lost 21% and Mexico's peso continues to slide too.
There's likely one more punch to Latin America from the U.S. this year: the Federal Reserve's long-awaited rate hike.
Taper Tantrum deja vu?: Two years ago, Latin American stocks tanked when then Fed Chair Ben Bernanke announced that the Fed would end its stimulus program. After the financial crisis, the Fed put interest rates at zero, and investors went overseas to get better returns on bonds than U.S. bonds, which still give back little. A Fed rate hike could change that scenario.
Latin America is better positioned now to weather a Fed rate hike than past ones. But there could still be an exodus of cash, experts say.
"There is going to be a taper tantrum in Latin America," says Aleman. "It is inescapable."
- 57496 reads
- Printer-friendly version
- Send to friend
- advertisements -



oh shit
Way to go central banksters.
Now look what you've done!
Just when Greece and China get fixed, this has to come along.
ARE YOU SHITTING ME?!?!?!?!?!
And after that, Australia may explode! Whacamole economic disasters everywhere! What do we do? Global thermonuclear war?
Miffed;-)
If Australia explodes, that means the bottom's really fallen out.
Down here , at the bottom (NZ) , I really couldn't care less. I've done everything possible so far to ensure the resilience of my business, but no doubt I will do more yet.
I've gotta say, I'm really looking forward to all this: mostly because I've put so much effort , over the last couple of decades into being ready.
Don't forget--->
Puerto Rico: The Greece of the Caribbean?
I have been prepping in NZ, but can't say I am looking forward to what is coming. The lack of rule of law in the rural area I was in actually drove me into the suburbs. There is too much P fueled gansterism and livestock theft as it is. I can't imagine what it will be like when the benefits and treaty settlements stop.
The surburbanites might have huge mortgages and vunerable jobs, but at least they have decent values.
you might learn something new of their 'values' when the fragility of supply is revealed
You must be on the North Island, Bro!
The 'burbs in Auck are on limited time if things turn to shit. "Countdown" is not just a retailer's name!
Bro, get yourself and family to the South Island as soon as you can!
Australia is a financial house of cards. Commodity prices falling, china slowing and a housing bubble. Ripe for collapse plus we have the dumbest leader in the world - Abbott the blunder from down under.
Ahh, the inevitable death of jew confetti will punch the game of Whack A Mole into ludacris speed. Watching Old Yellen and her Merry band of Hebes furiously pounding the mallet until they say "Oy vey, Fugit" and hit the big red EASY button labeled "WAR". This shit storm is just warming up.
They are sending all their crazys and criminals to the US.
Great so now we can expect more low IQ violent scum to come to the US.
but we get their starving under sexed womenz too. "should I wipe your ficus leaves Mr. Deeds?"
Sounds like someone needs a new revolution and a new wonderful socialist leader!!
A Fed rate hike is only talk. We have been waiting for a hike for years now.
No rate normalization during my lifetime Bernanke
Let's not forget that US inflation numbers are completely fake - so real US GDP is much, much lower than official estimates:
The Chapwood Index for 2014 was 9.7% and official CPI in the land of the free was only 0.8%. So the Nominal GDP of 5.6% for 2014 becomes real GDP of -4.1%.
The revised real GDP for years 2011 to 2013 worked out to -6.2%, -6.5%, -6.5% respectively.
What is the Chapwood Index?
"The Chapwood Index reflects the true cost-of-living increase in America. Updated and released twice a year, it reports the unadjusted actual cost and price fluctuation of the top 500 items on which Americans spend their after-tax dollars in the 50 largest cities in the nation."
http://www.zerohedge.com/news/2015-05-29/inaccurate-statistics-and-threa...
the fed has repeatedly provided guidance of "patience" regarding the rate hike
why are you being impatient?
Im increasingly of the beleif that they will not walk interest rates up gradually. They will wait for absolutely everything to deteriorate and suddenly flip them up to 5%
when have you ever seen a bait n switch with a glacial paced switch?
But I read on Bloomberg that the world economy is picking up.
Isn't that true?
Green shoots again?
Yes. Picking up rashes. The bad kind of rashes. Itchy, scratchy, unnerving, skin peeling rashes. All over.
You're gonna be just fine, Mr Knukies, we're just going to give you another enema and it'll all seem like ...
I blame the whole problem ... on the Confederate Flag!
That is likely a contributing factor, but they really should consider a modern language.
Ouch. Junked.
I meant Esperanto so the Portugese and Spanish don't suffer a language barrier!
Si vales, valeo.
Economy glorious! Buy now too late!
"The following censorship instructions, issued to the media by government authorities, have been leaked and distributed online."
http://chinadigitaltimes.net/2015/07/minitrue-rules-on-stock-market-repo...
bloomberg don't lie.
Bananas should be cheaper next year.......
I keep reading that bananas are going to go extinct from some scum. Supposedly, they are saturated with fungicides to keep them alive.
I also keep reading about Honeybee hive collapse and how almonds won't be able to be pollinated. Far too many almonds being produced, anyway. Almonds' raison d'etre is to be surrounded with chocolate in a Hersheys Almond Bar. Almonds serve no other useful purpose.
People with peanut allergies can substitute almond butter which is also more nutritious. Personally I love almonds but considering they require a lot of water and Cali is the main global producer, I believe that avenue of pleasure will be soon closed off.
Miffed
With the "super" El Nino on the way, by next year, the drought wil be forgotten and the cries will be "Why didn't they build more flood control projects in NorCal?" and "Why do they let people build on hillsides that turn into mudslides when it rains?"
I wasn't entirely serious. ;)
I like almond butter. Nutella is a great strain on my self control!
Always pleased to read your comments.
I tried to funny up above a bit further. My Dan Quayle routine. Funny does doesn't come naturally to me unless it is accidental inadvertent slapstick!
Let them eat Nutella......
Damned keyboard has a mind of its own. I would never construct garbled sentences like that.
Nutella! Yum! I'll never forget strolling Paris late at night in the Pigalle district munching on Nutella, grand Marnier crepes. Walking through the museum of sex and buying a penis snail ( custom agent took a hard look at it) while Mr was trying to look like he didn't know me to the exuberant proprietor ( couldn't decide the size but the lawn version was seductive).
Hey, you give me my wine bottle back this instant buddy... No you don't that is MY iPad. Oh, we're playing dirty now I see. I do have a data plan so go right ahead... I'm so SCARED! Ha ha.
Shit, never piss off a man with a large tractor.
Miffed;-)
But, but...TPTB are going to keep printing and hold things together for years, right?
Right?
crickets
THUD!
("You hear sumpin Mack?
I didn't hear SHIT. 'Bout you?...
My wife's daughter is a senior economist for the Bolivian central bank. She was just in Peru giving a presentation on how Bolivia has managed a very stable currency.
Is she making $3,000/week working from home?
No but last time I was there I went into the central bank and bought gold coins with Bolivianos. Seems they don't have a problem exchanging paper for what's in the vault.
You can enjoy your ignorance of a foriegn country but I doubt very much that a Chinese crash will affect them very much. They are in a period of rapid growth and prosperity with lots of young educated families stimulating a boom in housing.
I've got a problem with "young & educated". Where does "wisdom" fit into that hypothesis?
I've got a problem with "housing boom".
So does Canada, Australia, New Zealand... Those pesky communists just keep looking for good deals.
Bolivia, Export goods:
natural gas, soybeans and soy products, crude petroleum, zinc ore, tin
Sound familiar?
Main export partnersBrazil 40.3%
United States
You forgot a very popular cash crop. Coca and cocaine. Could it be that the production of popular illegal recreational drugs lead to comfortable foriegn exchange reserves and economic stability? Coca leaf and tea are not illegal there.
Also last time I was there I was in Bisa Bank and happened to see someone behind the counter unwrapping what appeared to be new USD bills in large packages that had been wrapped by the printing press.
http://bisa.com/
they can't raise rates...because the FEDs purpose for existence is to prop up markets.
Now that traded companies have gobbled up hundreds and hundreds of billions in their stock buyback price rampathon..increasing the interest rates on that 50 billion (MSFT for example) will not help the P&L.
so...since the faschists tell the President to tell the Treasury to tell the FED what to do...it won't happen.
The ENTIRE article is based on the premise that the countries will REMAIN pegged to and trade via the USD and BIS.
The moment they Decouple from the USD and BIS, and couple to the BRICS system (own currencies pegged to Real Assets and settled via CIS), you have two parallel global systems: 1. The American-led system of Imperial hegemony, and 2. The BRICS-led system of voluntary Commerce and Markets.
No wonder that the US is trying to front-run this with its Trinity of Trade Agreements.
We live in Interesting Times.
Do not worry citizen. We have Jade Helm training for foreign war in works. Do you not agree that north Texas looks like Russian Steppes?
Yeah, that dawned on me today.
"but that's more a reflection of politics than economics"
Oh really???
Moron-ism has long term consequences..
Paraguayans are actually crucifying themselves to celebrate the Pope's visit.
I've always suspected that millions of bizarre sects once existed in prehistoric times. We never heard of them because they managed to eliminate themselves.
Had a discussion with a group of very uniformed Mexican business people recently.
They were discussing the benefits of the Mexican government opening up the Mexican oil industry to outsiders. I laughed. they asked why. So I drew them a picture, with words.
The DC US, on behalf of their Zionist masters, are waging an economic war against Russia, and the price of oil is a big part of that. However, the Mexican syndicate, government, derives about 50% of their loot from oil profits. With oil way down, and Mexico a high cost producer, the pols and crats are looking at a dent in their lifestyles. Additionally, China is flush, and has come a knocking. But the Chinese want control of their investments, so to get the cash from the Chinese, and to prop things up some, the Mexican syndicate opened things up a bit.
The DC US, and their Zionist masters, were not pleased. Noise has been emanating toward Mexico ever sense. Does Mexico have WMDs?!
Zion is now moving toward a European and ZATO focus, and war dog, as they retreat from their now thoroughly picked clean DC US war dog. However, they still wish to retain control of oil, energy, especially to keep it out of the hands of the hot-potato-dollar ridding Chinese. So will Zion have the DC US invade Mexico on some pretense (19 Mexican hijackers?) or battle the Chinese in Mexico euro per dollar? My money is on invasion, for more than energy reasons. Time will only tell.
There was the standard head reboot blinking all around, and then things descended into the general bravado of "We Mexicans will whip those Gringos' asses..."
I don't see things ending well for Mexico in the big scheme of things.
Liberty is a demand. tyranny is submission..
Now the plot thickens. In February the Mexican syndicate's Pemex, the only gasoline producer and retailer (Walmart?) in Mexico, announced that, because of thefts from pipelines, they were moving to distribution by trucks instead. Of course trucks are more expensive and are MORE exposed to theft than pipelines. And when does government in such a situation not roll out the use of violence and guard the pipelines instead?. So what gives?
Then in June, and the beginning of July, Pemex ran OUT of gasoline in most of the Mexican states. They blamed thefts from the pipelines, not hijackings of trucks (No trucks have been hijacked.), which is completely unbelievable for a lot of reasons.
My inquiries into the matter seem to indicate that in a desperate drive to shore up profits and cash flows, the Mexican syndicate has been selling refined gas overseas (China?) and into the DC US via the pipelines.
"We Mexicans will whip those Gringos' asses..."
I imagine swarms of remotely piloted war-drones flying south. Maybe land-roving bots as well..
Gringos will be safely parked in air conditioned bunkers in Texas and Florida and Virginia listening to rock music and sipping hot coffee while blasting away video game style with total impunity.
I'm not even talking remotely controlled fully outfitted bombers, although that sort of hardware is not far from deployment capability.
Soldiers won't cross the border until after air power has softened resistance.
ALL theoretical, of course...
Our good neighbor Mexico would never do something as dispicable as purposefully expulse it's underclasses, hardened criminals, or insert thousands of state sponsored/encouraged activists and/or mercenaries with a fully developed racial/nationalist ideological program to depose the existing populations and expropriate US held territories...
If there is a single country on the planet that should be number one on the invasion list it is Mexico. Not for oil of course.
That's the China Put and it's only the front edge. Brazil will be a huge drag on the whole continent. Inter communal socialist butt fucking in Chile, Peru and sadly Colombia under Santos will throttle any growth outside BR.
Will not even include inbred retards in Argentina, Bolivia, Ecuador and Venezuela.
I'm still liking Uraguay as possible escape haven though.
Latin America will be fine. The market for drugs is always strong.
Latin America is investing in the poor.
Taking the middle class.
Investing in rich, like the US and Europe, fuck the middle class.
Makes the poor.
HDI, unemployment, average income, etc. .
Read graphics.
Do not invest in Latin America, will be good for us!
Kkkkkkkkkkkkkkkk!
We know not say,
"- I will not pay!" "- Fuck!".
hehe.
Latin America (especially Brazil) is now with China and Russia.
The average American considers Latin America "from down Mexico to ..... (- do not know)."
Some notion on Central America because there is a channel "the same as Suez" where ships pass.
Below that, pure ignorance!
Like for example:
- All speak Spanish.
- Brazil's capital is Buenos Aires.
- The Iguaçu Falls are a tributary of the Amazon River.
- Everyone likes to pepper etc. .
Total ignorance as not to know the difference between Sunnis and Shiites.
I'm not kidding, I heard this in many "gringos" USA.
French cadenses are better at geography, Europeans as well.
hehe.
I agree that knowledge of Brazil is poor, like, people think Brazukas speak Spanish. But you shouldn't take it personally because many people are ignorant of many other countries too. Exactly what is the national language in India? I dunno.
A large part of Brazil's problem stem from its utterly incompetent and corrupt political class. I was in Curitiba several months ago watching the national demos against Rousseff and the "quadrilha" of thieves that runs the country. Brazil is one of the most corporatist economies in the world to the detriment of its people. As an outsider, I see many urgent changes which are necessary to modernise the economy but which are not carried out because of corrupt corporate interests.
bom dia ...
All correct. Still, some REGIONS of Brazil may be the best bet for a strategic relocation for various reasons when economy comes tumbling down... think food and water. Check out these options - http://visa4brazil.com/
Every country wants to compare the education and sophistication of their elite with the average American and use those examples as justification to embarrass us. I say FU to those folks. Take a look at the peasants of China, Brazil or any country and compare them to our peasants for a good comparison.
All economies are slowing down. USA are going into a worsening recession and is not going to help anybody. Forget about the FED raising interest rates. More likely QE4, even more super duper QE.
Oh, no use putting "-" for a guy who:
- You know that your President was tortured by military trained by the US.
- A guy who had his father arrested because it was nationalist during the military regime (US-imposed).
No, my dear, it will be very difficult to change it in subquequentes generations.
Who takes a slap in the face never forget.
I have a grudge?
Yes! Very!
Justice is being made and I am not politically correct in my way of expressing.
: - |
Karaio,
You are alright for a socialist. I admire anyone who is proud of their culture, heritage, and country. You are going to take a drubbing from down votes. Not from me. I appreciate your perspective, whether I entirely agree or not.
A "limited nuclear exchange" between the U.S. and Russia right now could be construed as a "confidence building measure."
Nothing like Being on the Golf Course when that happens...
No mention of the eco-imperatives facing the region. To take just one example, much of Brazil has been in drought for three years, Sao Paulo (20 million people) has water and electricity rationing (70% of Brazil's power comes from hydro), and water riots are no longer unthinkable. A global economic slowdown is not helping, but Mother Nature bats last.
All they need to do is build a fat pipeline from Curitiba to São Paulo to carry surplus water there. End of SP water shortage. It never stops raining in Curitiba.
But, but,... BRICS!
Funny how quiet that cartoon channel has become.
I know where North America is located..where central America is...where South America is located..but where is Latin America?
California and Texas are also Latin America by numbers, they just have a different flag..
He never mentioned Brazil or Mexico, thw two most dominant Latin American countries.
All Latin-speaking countries. The Vatican is the Capitol.
Roughly...west-sothwest of the Orient. Jajjajajja jajjajajja jajjajajja
Latin American leaders use the old sovereignty chestnut when their economies are in trouble, Venezuela blames the US and has a territorial dispute with Belize and Argentina has the Malvinas white elephant which has been exposed as a fraud:
https://www.academia.edu/10490336/Argentinas_Illegitimate_Sovereignty_Claims
Argentina has not been a good neighbor .... anywhere !
Crap. Those guys will bullrush our border coming up i shit you not, and Obama's crazy enough to make it illegal for anyone to prevent an illegal from entering the country citing humanitarian reasons. Do people actually understand that humanitarian efforts are actually brainwash?
Don't forget .... the Monedas "Potato Index" .... I just picked up a 10# bag of spuds .... in Mejico .... 19 pesos ($1.27) .... regular sales price is 30 pesos ($2) .... how much did the Idaho/Oregon grower make on that .... we all have to tighten our belts .... in the real economy ? PS: The potatoes were uniformly medium sized and not sprouting .... the really cheap ones are odd sized culls with sprouts !)
And the Marist Pope is visiting SA to whip up revolution - Well timed. When will American Catholics dump this medieval Dictator in Europe and establish the administration of their religion here in the US. Can't be done? - Read up on King Henry VIII. Case closed!
Our great leaders wanted globalization, now they've got it.
Business cycle ... what business cyle. All trees are supposed to grow to the sky.
/s Central Bankers
> Venezuela is arguably the world's worst economy with
> sky-high inflation.
Wait wait wait. You mean you CAN'T just devalue your currency to supply the source of transfer payments? Really? I thought that was the ZH community solution to the Greek crisis.
Argentina has 1. no debt, 2. all the food, water and enery it needs, 3. no racial or immigration dramas, 4. and a population well aware of the way vultures, banksters (and their wannabes) work through the manipulation of PERCEPTIONS, no?
The US would have a 'taprr tantrum' too...soooo
And using the FAKE US stock market to compare to those in S AM? LMAO!! What would the S & P look like without all thee rigging...saying it's"flat" eith a straight face and no qualifiers is just a
DAMN LIE!
S AM still has a crap load of dept to GDP and demographic/resource advantages overall.
And much less background radiation ;-)
My name is Pancho - I work on a rancho - I make 5 pesos a day
I go see Lucy - to get some pussy - she take my 5 pesos away
When China sneezes, Brazil catches ebola..........
This guy will save the day...(sone sarcasm but the drug trade like in afganistan, is the money maker for the poor)...
http://www.reuters.com/article/2015/07/12/us-mexcio-guzman-idUSKCN0PM070...
In other news I would have to agree with this,
http://www.reuters.com/video/2015/07/07/newsmaker-president-carter-on-mi...
How are things in Quebec?