Alistair Barr over at MarketWatch warns, today, that emerging markets may be peaking.
Feb. 15, 2011, 2:55 p.m. EST
Emerging markets may be overheating: Citi CEO
Big banks may struggle to make 20% returns on equity, Pandit says
By Alistair Barr, MarketWatch
SAN FRANCISCO (MarketWatch) – Emerging markets may be overheating and will have to increase capacity and control inflation, Citigroup Inc. Chief Executive Vikram Pandit said Tuesday.
Pandit also said big banks may struggle to generate 20% returns on equity in the future, in a speech at the ISI Group 2011 conference in New York.
“Many of the emerging markets are operating at or near capacity and are therefore at risk of overheating – and must deal with the possible consequences of inflation,” he remarked.
Surging food prices show that “there are some countries where you’ve reached close to capacity,” Pandit said, without mentioning specific nations.
Still, the Citi (NYSE:C) chief noted that this is happening because emerging markets are growing strongly. “Their challenge is to work out how to increase capacity. Central banks on the ground are doing a good job trying to handle this trade-off between growth and capacity.”
Citi has the most exposure to emerging markets of any big U.S. bank. Pandit said Tuesday he’s “comfortable” with the portfolio of loans the company has made in these countries. That’s partly because consumer leverage and corporate-lending penetration is still relatively low, he explained…” More:
Surely, with the lose monetary policy, we hear all the time, how ‘strong’ the dollar is against the Euro, and the currencies of other developed nations, but what we do not hear much about, is how zerp (zero interest rates policy) has increased the currencies of emerging nations, especially those with large mining and mineral operations. For example, Australia’s dollar, today trades at 0.9964, pretty much, neck and neck, with the US dollar.
There is no doubt that commodities have had an enormous run up in the past year. Oil is trading at 86 a barrel, and gold is off the roof in the 1300s. How long can a good thing last, is anybody’s guess, and so, since it’s a question, I am interested in. I feel passionately about markets. It is my business, to know, and it should be yours, too. So I ask:
Are emerging markets about to hit the skids?
When we look at horary charts, the first thing we do is to look to the ASC. This gives the atmosphere of the question to us. Here we have the ‘quick’ and nimble Gemini, rising. This will a sort of lightness or flexibility to the atmosphere of the question. In other words, it’s a question sort of asked at the ‘spur of the moment’ and so it’s a casually asked question, much the sign, Gemini, which is comprised of two children. In the first house, we see the Dragon’s Tail at the last degree of Gemini. This could portend some downward movement, but at 29 degrees, it may be ‘down the road’ a bit.
The next thing we do in such a chart, is to examine the condition of the planet that governs, or has control of the sign rising on the eastern horizon. In this case, that planet is Mercury. The first thing we notice is that Mercury is of the same nature as the sign on that all important cusp, in other words, light and airy in nature because the sign rising, and its ruler, Mercury are both in an air signs. Air brings a lot of ‘hope’ for the future, and as such, they tend to be bullish.
Mercury is up at the top of the chart. This portion of the chart is called the ‘price’ in ancient charts. So when we see Mercury heading towards the top of the chart. And we all know that old saying, ‘what goes up must come down.’ In this case, Mercury is about 5 degrees from the top. This may buy emerging markets a little time. However, Mercury is also heading straight into the molten bubbling rays of the sun. This is called, combustion. The Sun is just so much bigger and stronger than Mercury, that it doesn’t ake much imagination to figure out what happens, when this happens. In ancient think, this is the sign of trial by fire. In the question at hand, the all powerful, Sun also rules the house of bottoms, that of the 4th.
What does this mean? Well, in a nutshell, given Mercury’s upcoming peaking, then falling into the fiery arms of the Sun, not to mention, that depressing South Node in the 1st, we may, indeed, see emerging markets go down. But when ???
Well, in horary, angular planets stand for months. Since Mercury is within 5 degrees of the cusp of the 10th, it may buy emerging markets a few months, but since Mercury is just leaving the antiscion of the parsfortuna, we have a pretty strong bet that the boom days, are over.