Brazil stems the flow but pressure persists

Popular opinion last weekend was that Brazil had "got away with it". I'm not sure exactly how Brazil has got away with anything - the real is still under pressure and, after the initial surge in the Bovespa, the country continues to see outflows - not as high as before the currency floated but worrying all the same. The total outflows for January so far are well over $7 billion (€6.04 billion) and they have been talking about price controls, capital controls and foreign exchange taxes. If that's "getting away with it" I shudder to think what the alternative is.

However, this week it was China's turn to be in the frame as a report in the China Daily Business Week speculated that a devaluation might not be a bad thing. (Amazing how devaluations have changed from being a terrible thing to not a bad thing). The comment was that the markets responded positively to the Brazilian move and so what worked for them might work for China. Do they really want massive outflows from China? Officialdom quickly dismissed the report and vehemently denied any inclinations towards following Brazil down the slippery slope.

The whole emerging market scenario has left people feeling very vulnerable as they wait for a hammer blow from somewhere!

Meanwhile, Fed chairman, Alan Greenspan, must feel like the boy who cried wolf. He's been saying that equity markets are overvalued for so long now that nobody gets too worried when he says it again. The inevitable scenario is that markets dip when he worries and rebound again almost immediately afterwards. And, in the volatile atmosphere that has reigned over the past year or so, a rise or fall in the Dow of 100-200 just is not news.

For investors looking at alternatives to the hurly burly that is the equity market I see that the glitzy world of rock 'n' roll is being dragged into the bond arena again. I don't know how well investors are doing out of the David Bowie issue - my only foray into Bowie merchandise was a Ziggy Stardust poster. However for those who found Bowie too tame there's always Iron Maiden who are reportedly bringing a £20 million sterling (€28.5 million) issue to the market. I know that investing in equities brings benefits to shareholders like discounts on merchandise. Will Iron Maiden do the same for their bond investors? Much more exciting than an investment in a bluechip equity don't you think?

But if Iron Maiden aren't your thing, the Florida Windstorm Underwriting Association hurricane pool is talking about issuing about $1 billion in bonds so that it can increase its capital available for hurricane damage. The association will be paying somewhere in the region of $150 million in claims for damages following Hurricane George and it needs to increase its finances so that it can pay claims which might result from yet a bigger hurricane.

Live dangerously, buy bonds?

Following my panning of Marks & Spencer last week, some friends reminded me that M&S is not the only British retailer under pressure. Of course it is not, but it is probably the one where I (used to) do the most shopping.

Nevertheless, media attention has also been focused on Laura Ashley which has got itself yet another chief executive. The last time I read anything about Laura Ashley it was following the appointment of Ann Iverson as chief executive. As far as I recall she was labelled as "brash/American/forceful". At that time the company was talking about revamping its lines, becoming more contemporary and reaching out to new consumers. This was always going to be a difficult task for a company whose reputation was founded on flowery printed dresses, flowery printed wallpaper and flowery printed bedlinen. Once the flowery prints have gone, so has the company's ethos. Anyway, not being the flowery printed kind of person I steered clear of Laura Ashley. I did see one of their new contemporary dresses on an episode of the BBC's clothes show and it was OK - big flowers rather than little ones. Not anything I would have bought myself, though, and, it seems, not anything anyone else would have bought either. Profits continued to fall and Ann Iverson left the company.

The latest chief executive, Victoria Egan, had only been with the company five months before deciding to leave for "personal reasons" after sales fell by 11 per cent in the eight weeks to mid-January. But the reason Laura Ashley hit the headlines was because, having appointed a Malaysian businessman, Kwang Cheong Ng, as chief executive (how will he look in flowery prints?) it has also appointed a television evangelist, Pat Robertson, as a director. This has lead to a lot of tongue-in-cheek comment about "divine inspiration" but Laura Ashley needs it. Mr Robertson was appointed for his knowledge of the US market but I'm intrigued as to what that might be. Maybe the women who watch his sermons wear flowery prints. He owns about two million shares so he obviously was not getting any tips from the top before now. The company lost £349.3 million last year.

If Alan Greenspan is right, though, and consumers start to rein in their spending, the signs are not good for Laura Ashley in Britain or the US. But where will lower equity markets leave the holders of the brightest, newest most profitable stocks - Internet companies? The way the prices in these little babies gyrate would even frighten an Iron Maiden aficionado. (Not to mention Mick Jagger - maybe he'll need to securitise a few albums to provide for Jerry.)

The get-rich-quick mentality is so strong in all of us that it's almost impossible to avoid the lure of Internet stocks. But you know these "sure things" - the only sure thing about them is that for every company that lives up to expectations, there are 100 that won't.

I like the Internet. I can understand why some of the companies are going to stay very valuable. But they all won't. Of course a lot of them deliberately price low at the start to hit the headlines when shares go up 600 per cent in a day. When, eventually and inevitably, some of them crash, I guess Alan Greenspan won't be feeling too unhappy about it. And neither will the rest of us who were too chicken to buy any at all!

Sheila O'Flanagan is a fixed-income specialist at NCB Stockbrokers.