Emerging markets selloff bruises big-name funds

The plunge in emerging markets is taking a bite out of the performance of funds managed by some of the biggest names on Wall Street, including BlackRock, Brevan Howard and T. Rowe Price.

Some mutual funds are already down 10 percent so far this year, thanks to declining stocks and currencies. And that drop has intensified selling pressure as investors rush to pull more money out.

“It has been a disappointing beginning of the year,” said Will Landers, a BlackRock equity portfolio manager with close to $4 billion in assets under management. The BlackRock Latin America Fund is off 10 percent this year.

http://www.reuters.com/

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New York bank regulator Lawsky opens currency trading probe

Benjamin Lawsky, New York’s financial services superintendent, has opened an investigation into manipulation of the currency markets by large banks and is requesting documents from more than a dozen institutions, according to a source familiar with the matter.

The source said Lawsky has asked for documents from Barclays BARCR.UL, Credit Suisse (MLPN.P), Deutsche Bank DBKGN.DE, Goldman Sachs (GS.N), Lloyds Banking Group Plc (LLOY.L), RBS (RBS.L), Societe Generale (SOGN.PA) and Standard Chartered.

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How China’s Slowdown Is Having Ripple Effects All Over The World

Chinese economic growth slowed to the lowest level since 1999 last year, expanding 7.7%.

Policymakers have recognized the need to rebalance economic growth and are now slowly transitioning away from a credit and export driven economy to one driven by consumer growth. Some argue that the recent crackdown on shadow banking and the money market rate spikes are part of this effort.

But what sort of ripple effects impact is all of this having on the global economy?

First, let’s take a look at economies that rely on China to consume their exports.

Bloomberg chief economist Michael McDonough tweeted this chart that shows the percent of country’s total exports consumed by China.

Read more: http://www.businessinsider.com/ripple-effects-of-chinese-slowdown-2014-2

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Deutsche Bank Is Said to Fire 3 Currency Traders in New York

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The three employees include the head of Deutsche Bank’s emerging markets foreign exchange trading desk in New York and two traders, said the person, who was not authorized to discuss the matter publicly.

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Tomorrow the ECB decision will surely bring some volatility.

None of my tickers are showing much action today. Yen crosses are down modestly but nothing compared to the volatility we’ve seen over the past few days.

FX moves

The euro tried the upside a few times today and will close out the day with some small gains but tomorrow the ECB decision will surely bring some volatility.

Draghi & Co can opt to do nothing or take action in three different ways:

  1. A 10-15 basis point cut in the main refi rate
  2. Switching to unsterilized bond purchases (QE)
  3. Negative deposit rates

The legality of option #2 is questionable. Any of those move would spark euro selling, partially because it implies more future action.

Ten days ago, the market was comfortable with a wait-and-see decision but soft inflation readings have put pressure on the ECB to act.

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Conventional economic policies will not solve unemployment, writes Jørgen Randers, we should think about rationing paid work and introducing compulsory holidays

Will the rich world again see the high economic growth rates we got used to in the decades prior to the year 2000? An increasing number of macroeconomists seem to think that the answer is no. I agree: growth will remain low. Furthermore, conventional policies to enhance economic growth will be ineffective.

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Much of the analysis in the last few days has focused on why these nations are less exposed to a financial meltdown than during the Asian crisis of the late 1990s. A major reason is lower overall foreign debt exposures.

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