Back to top

Real Time Insight

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.


SInce May 2013, emerging market (EM) stocks and currencies have been getting killed.

The reason?

The Fed in the United States signaled it was going to start to taper $75B in monthly bond-buying stimulus.  An almost palpaple sucking sound could be heard around the globe.  Capital rushed out of the emerging markets bound for safer places in advanced countries.  

A lot of countries were forced to raise their sovereign bond interest rates to offer more attractive fixed income rates and bring the money back.  Still other countries intervened directly in their currency markets and bought their currencies to keep their exchange rates stable.   By early winter 2013, it looked like these EM capital flight matters had been addressed, and EM currency stabilization was here.  

Then, the Argentine Peso did a massive face plant two weeks ago.

For an example, consider the Brazilian real.  The Brazilian real started 2013 at 2.00 to the U.S. dollar.  In early May, the announcement of the possibility of a Fed taper hit.  By August, the Brazilian real was pricing at 2.45 to the U.S. Dollar.  That's a -22% depreciation.  Then, the Brazilian real settled back down for a few months. The Brazilian real got to 2.25 to the U.S. dollar by late November. FYI, the Brazilian central bank did heavily intervene along the way to stabilize this currency.

Since the start of 2014, it has been ugly again for the Brazilian real.  It is now just off a fresh 2.44 high and is pricing at 2.39 to the U.S. dollar this morning.  The same story is true for the Turkish lira, Indonesian rupiah, South African rand, and Russian ruble.

It looked to me that the sudden crash in the Argentine peso a couple weeks ago took all of the EM currencies down again.  This time around, it started a crescendo of stock selling that reached into the U.S. equity markets.  The NASDAQ, S&P 500, and Dow all experienced heavy selling when the latest round of EM currency fear hit.

My RTI question:  Where Do EM Currencies Go From Here?

Some Choices -

(1) Bearish.  Capital flight is going to get worse.  EM currencies will hit new highs.

(2) Bullish.  It is over.  Super attractive valuations on EM stocks and attractive yields on EM bonds will bring the money back.

(3) Range-bound.  It is stable...for now.  EM stocks, bonds, and currencies are going to be avoided.  But with the help of their governments, their prices will be stable for now.

Zacks Releases Their 7 Best Stocks for May, 2014

These 7 were hand-picked from the list of 220 Zacks Rank #1 Strong Buys with earnings estimate revisions that are sweeping upward. Their stock prices are expected to rise sooner than the others.

Today, this Special Report is available to new Zacks.com visitors free of charge.

Close This Panel X

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%