Turning Points: Capital Flees the Eurozone and Comes to the United States

by Ron Rimkus, CFA, Enterprising Investor

Turning-Points-capital-flees-eurozone-and-comes-to-the-united-statesCapital is fleeing the euro and yen and the USĀ dollar is surging higher. The US Federal Reserve is ever so slowly positioning the United States for a rise in rates while the rest of the world is slashing theirs in response to weakening economies. It seems the capital that departed the United States after the financial crisis is coming home after a long journey.

Meanwhile, Chinaā€™s economy continues to deteriorate as the housing slump there has gone from recession to depression, with dramatic declines in real estate transactions.

Of course, with the backdrop of aggressive monetary policy, the fledgling bitcoin cryptocurrency market is growing by leaps and bounds. Many high-profile Wall Street executives are jumping into bitcoin-related ventures, building a dizzying array of financial products and services as noted below.

Lastly, Iā€™d like to draw your attention to some interesting comments made by Ray Dalio of Bridgewater Associates. Dalio suggests that the Fed raising rates in 2015 would be much like the Fed raising rates in 1937,Ā warning that such a move today would lead to a recession like it did in 1937.

Hereā€™s a wrap-up of key issues affecting global markets for fundamental investors.

Currencies

Commodities

Chinaā€™s Direction

Credit Markets

Derivatives

Energy

Euro Crisis

Hedge Fund Money

Interest Rates and Central Banks

Japanese Debt and Inflation

The Stock Market

Follow the Bubble

Time Capsule

Ray Dalio thinks the Fed is possibly repeating 1937 all over again. Back in 1937, the market was eight years removed from the start of the Great Depression when the Fed began to raise rates.Ā  Dalio thinks the parallels are striking. In the linked article, he cites six reasons why market conditions are similar today to what they were back then.

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All posts are the opinion of the author. As such, they should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute or the authorā€™s employer.

Photo credit: Ā©iStockPhoto/kmlmtz66

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Copyright Ā© 2015 Ron Rimkus, CFA, Enterprising Investor

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