testosteronepit.com / Wolf Richter / FRIDAY, JANUARY 24, 2014 AT 4:23PM
All heck broke loose in equities, after an already iffy start of the year, and Friday’s hair-raising plunge across the board left the Dow down 3.7% for the week. They got clobbered worldwide: in Asia, except China, in Latin America, in Europe – with Germany’s DAX down 3.6% for the week and Spain’s IBEX 35 down 5.7%.
And emerging markets, oh my! Equities plummeted. And outright bloodletting took over the currency markets. The Turkish lira dove, though the central bank tried to prop it up. Argentina, which is desperately lacking dollar reserves and might not be able to service its dollar bonds, simply threw in the towel and let the peso devalue, rather than blow more dollars that it didn’t have on slowing down the fall. BOOM – 13% of whatever wealth was tied up in the peso has evaporated.
“Global emerging markets are now trading in full-blown panic mode,” explained Benoit Anne, global head of emerging-market strategy at Société Générale in London.
A teeny-weeny bit of taper, and look what happened.
Now Wall Street is lining up at the Fed, whining! And the media are diligently reporting that “the jittery financial markets” might or would or at least should cause the Fed to revert to the halcyon days of full-blown no-room-for-doubt QE Infinity. They want the Fed to get on it, and pronto, and do so with redoubled efforts.