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Friday, January 24, 2014

The currency vigilantes

Welcome to what’s possibly “phase one” of the emerging markets rout, Reuters’ Natsuko Waki reports. For no apparent reason, currencies in Argentina, Russia, and Turkey hit record lows on Friday in what Bloomberg called the worst emerging market currency sell-off in five years. This had all sorts of side effects, including sending Spain’s IBEX down about 3.5%.

“The bond vigilantes may have given up the ghost,” The Economist writes of today’s relatively quiet sovereign debt market. “But the currency traders remain on patrol.” Capital Economics’ Neil Shearing, via Sam Ro, has a nice guide to the tiers of emerging markets. On one side of the spectrum, Argentina, Ukraine and Venezuela are rife with “serial mismanagement”. On the other end, in Korea, the Philippines and Mexico, things are looking positively sunny.

Though one analyst said “market participants struggled to identify a catalyst for the moves,” the FT offers suggestions for all this emerging craziness. First, the Fed’s taper, which poses a threat to emerging economies that have been borrowing cheaply in dollars, but find their own currencies weakening as they try to pay back their creditors. Second, “those concerns have been compounded by worries over Chinese economic growth”.

In Argentina things are particularly bad -- Shane has some nice charts here. The peso fell 16% against the dollar between Wednesday and Thursday, in the worst drop since the country’s 2002 financial crisis, and it fell another 1.7% on Friday. The Argentine central bank has been supporting the peso for at least a year, but it finally stopped on Thursday.

Investors, the FT writes, think that the lack of support might be an attempt by Argentina to narrow the gap between its official and black market exchange rates, which can differ by 30-40%. Both rates fell on Thursday, Rob Minto writes. Roberto Ferdman writes that Argentina can’t afford to prop up its currency anymore: the country’s foreign exchange reserves are now below $30 billion, the lowest reading in seven years.

Besides blackouts, looting and a possible default, Bloomberg Businessweek writes, Argentina still can’t get access to international debt markets while it fights in the courts over 2001 bonds with hedge fund manager Paul Singer. -- Shane Ferro and Ryan McCarthy

On to today’s links:

Right On
Why the Drudge Report is one of the best designed sites on the web - Jason Fried

Davos
What’s wrong with Davos - John Carney
Davos still hasn’t solved its woman problem - Helaine Olen

Remuneration
Jamie Dimon gets a raise - DealBook

Ugh
The Justice Department goes after a for-profit hospital for scheming to inflate bills - NYT

Regulations
No, Washington did not defeat Wall Street in financial reform - Mike Konczal

Startups
"The challenge of venture investing is that the model depends on investing in things that are laughable" - Benedict Evans

Quotable
"When asked if he had seen any hiring that appeared to be a bribe, Blankfein said, 'Not firsthand'" - Bloomberg

Great Bloomberg Headlines
"Billionaire Braves Bloated Self-Importance for Davos Chat" - Bloomberg

Corrections
"The plantings on the green roof... were native flora, not native fauna" - NYT

Strangely Existential
"I am only a grain of sand, as is Mr Martoma" - Alexandra Stevenson and Matthew Goldstein

Oxpeckers
Study finds that the media is bad at choosing what study findings to cover - PLOS ONE

EU Mess
The US vs European model (of sports ownership) - Stefan Szymanski

Says Science
Chemists have figured out how to clean cash, making it less expensive to produce - Fast Company

Financial Arcana
Are malls dead? Check the CMBS! - Housing Wire

Follow Counterparties on Twitter. And, of course, there are many more links at Counterparties.

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Culture Beast: Bad Behavior In the Age of Bieber

The Daily Beast
January 24

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Culture Beast
Five must-dos this week
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1
SCANDAL
Bad Behavior In the Age of Bieber
The 'child star gone bad' narrative is hardly new. But the digital age in which Justin Bieber's meltdown is unfolding is. Why we should be more worried than ever. By Kevin Fallon.
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2
FESTIVALS
Sundance's Hottest Film
No movie was talked about more at Sundance than Whiplash, a drama about a jazz drummer in a conservatory who butts heads with his tyrannical teacher. By Marlow Stern.
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4
COMEDY
Amy Poehler's Girls of Comedy
Comedy Central's Broad City is a love-in-the-time-of-sexting depiction of millennials. But fear not Girls lovers, there's room for more anxiety-ridden twentysomethings in New York City. By Abby Haglage.
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Dozens are spread about, some dressed, some not, some bowling, some engaging in sexual contact.”

READ IT NOW ›

5
FILM
Shailene Woodley Grows Up
You'll be hearing a lot about Shailene Woodley this year, with starring roles in the blockbuster Divergent and the drama The Fault in Our Stars. We sat down with her at Sundance for a long conversation on her latest, the mystery White Bird in a Blizzard, and everything else. By Marlow Stern.
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3
TV
The Trouble With 'Friday Night Tykes'
The new reality show depicting kid football players told by demented coaches to smash into one another has become controversy catnip, but it is a nuanced program that looks like Fellini next to other exploitative offerings. By Tim Teeman.
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12 Celebrity Mugshots
David Lynch: Film to Photos
George Takei Through the Years
Best & Worst Dressed of the Week

In response to Yes, 'Looking' Is Boring. It's the Drama Gays Deserve.:

We do not have a gay society and a straight society, we have a society with gay and straight people in it, therefore we have shows with gay and straight people in them (Family Guy even addresses transgenders, Quagmire's father had a sex change).

— Indestruction

In response to Justin Bieber or Richard Sherman, Who's the 'Thug'?:

What a load of garbage. Mr. Sherman was called a thug because he acted like one during his rant. Bieber, on the other hand, might be an immature jerk, but he's so wimpy he could hardly carry the implicit threat of violence that warrants the title of "thug."

— 00buck

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Yashi

Chitika