On Deck: Full Blown Asian Crisis

I recall getting mud-stomped into the ground when I was fresh in the business, in 1997 through 1998. I told this tale several times here (you can find it under “Fly stories”). The long and the short of it is, I was very green and very ignorant to the world around me, just like most of you. I’d carelessly run about the city, drinking beers and throwing money away on sterotypical broker stuff. All the while, a storm was brewing, as plain as day; but I was too focused on commissions and how I might make them get bigger.

Over the past several months, borrowing costs in Asia have skyrocketed. Some of their currencies are being dislodged and a general sense of anxiety is now in the air. This all has to do with our Federal Reserve and how QE money found its way into Asia. The good news is, many asian nations have decent reserves and aren’t levered up like us. However, borrowing costs are borrowing costs and that’s gonna eat away at growth, as evidenced by the Dry Bulk shipping rate collapse.

Have a look at some 10 yr bond yields in Asian and South America, terribly reminiscent of the European crisis of a few years ago.

Turkey

Thailand

Taiwan

South Africa

Singapore

Russia

Malaysia

Indonesia

India

Hong Kong

Colombia

China

Brazil

Someone just threw a BRIC through our facade and reminded us how incredibly fragile the world of finance is. Back in 1998, I wanted to die, instead of looking at the market every day. Markets like that drive men to alcoholism and/or abject poverty. Just when you thought the market couldn’t go lower, it went down so hard you felt as if you were living in a comical world, where up was down and down was in hell. I do recall, however, DELL managed to trade up during that time, as it was a hyper-growth stock back then and everyone wanted in.

Let’s look at SHIBOR (interbank lending in China)

And here is the wonderful “SPY action” from 1998, the wonder year, the year that broke me and then made me.

If you haven’t raised cash already, it’s not too late, as this thing looks like it’s just getting started. Plus anyway, now is a good time to ditch the speculative stuff and place the high quality stocks, that are now discounted, onto the proverbial front burner.

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