The Asian Contagion – 1998 Rhyme Of Market Correction

The Asian Contagion – 1998 Rhyme Of Market Correction by Stephen Aust, MarketCycle Wealth Management

History does not repeat, but to quote Mark Twain: “History sometimes rhymes.”  In our opinion, what we recently went through was a rhyme of 1998.  We dodged a bullet; it could have been worse than it was.

1998 revolved around the “Asian Contagion” which involved the falling of emerging market currencies, falling interest rates, plummeting oil prices, increased interest in U.S. Treasury-Bonds, falling global stock markets (minus a U.S. recession), increased investor panic and subsequent strong recovery:

1. In early 1998, Asian emerging market currencies started to tumble (China is an Asian emerging market).
2. Emerging market countries started to raise their interest rates in an ill-fated attempt to prop up...
   

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