THE BEGINNING OF THE END IN THE MARKETS
Despite the fact that the BoJ has disappointed the investors, because there is an abundance of liquidity in the marketplace, not a single investor would like to miss the bonds of emerging countries which have a high yield, if there isn't any financial crisis. And if the rally in the bonds continue, it will support the currencies of the emerging markets against the dollar and also the stocks. At the same time, the loose financial conditions and high oil prices will carry on supporting the risky assets of the emerging countries during May.
The risks start in June. According to the latest poll, those who want the Brexit in England are leading by 46% compared to those who want to stay in the EU who are %44. China's economic growth is pumped up with a very dangerous credit boom, the rise in the price of oil is in an extent due to the weak dollar; but these are passive variables. The most important reason for the change in the direction of the markets will probably still be the United States. In the first scenario, we will see that the increased employment and the rise in the inflation will go beyond the endurance limits of the Fed, the signal will be given in June and the second interest hike will take place in July. In this case, the dollar will once again enter into the appreciation trend and this will trigger a hard sell in the emerging countries. In the second scenario, the Hillary Clinton-Donald Trump race will damage the confidence in the economy and the economic growth of the United States will remain below %1 throughout the year. In this case, the dollar will continuously remain weak, and the global growth story will take an end and this time, the sales which will start in Wall Street will spread to the emerging countries.
Thus, for the June-August period, the most likely scenario is: the Fed will raise once more its interest rate and the speculative funds will leave the emerging countries. Due to this, one should hold its positions in order to catch the last buy wave in May but pass to gold in June.
