While most people thought that Syria was going to be the biggest thing to come out of the G-20 for futures, the impact of tapering on the emerging markets really was the hot subject. As emerging markets have been getting crunched and a flight to safety on precious metals became apparent it now seems that the emerging markets are going to fight back as countries like India and Brazil are fighting desperately to try and slow the flight out of their QE supported currencies.
Russia not only is signaling to the U.S. not to attack Syria but to also be careful with that taper thing. The BRICS countries (Brazil, Russia India and China) sought to fight back against the ill effects of the taper by creating an anti -taper pool of $100 billion to try to stop the run on their QE supported currency and into precious metals.
Tapering fears has caused a run to precious metals by these BRIC countries as the people desperately try to hang onto the value of their ruble, rupee, real. In China gold demand is soaring as the uncertainty surrounding government policies is causing economic fear even more gold buying. Gold sold off as the dollar got strength from strong U.S. data and rising yields, but also from the fact that Brazil's central bank maintains its market intervention. India also has been desperately trying to stop a run to precious metals. The BBC reported that the new head of India's central bank, Raghuram Rajan, has said he will take strong measures to tackle the issues facing the economy. Mr. Rajan, a former chief economist at the international Monetary Fund, takes over at a time when India's economy is grappling with challenges on various fronts. Its currency has weakened sharply and its growth rate has dipped to a 10-year low.
And of course you had Syria talk. President Obama seemed to enlist Australia on his side but failed to convince many others. China and Italy also warned about the potential damage to the global economy if indeed President Obama decides to go to war in Syria. A lot of those concerns revolve around what might happen to the availability and price of oil.
Yesterday's Energy Information Report seemed to suggest that the world will be looking to the U.S. to make up for any shortfall. WTI gained on Brent as U.S. crude supply fell and U.S. refiner ran like crazy! U.S. exports are surging!