MONEY stocks

Emerging Market Worries Prompt Wall St. Selloff, But Bulls Remain

Markets Turbulent On China Unease
Spencer Platt—Getty Images Traders work on the floor of the New York Stock Exchange (NYSE) on August 21, 2015 in New York City. The Dow fell over 150 points in morning trading as global markets continue to react to economic events in China.

Nervousness about China is overshadowing the improving U.S. economy, notes one portfolio manager.

The steep selloff that pushed down the benchmark Standard & Poor’s 500 index 5% over three days may say more about the outlook for emerging markets than U.S. companies in the fourth quarter, fund managers and analysts say.

China’s economic slowdown, recessions in Latin American countries such as Brazil and Chile, and a breakdown in commodity prices – combined with a thinly-traded market as many investors become more focused on tide charts than trading terminals – are prompting traders to overlook improving U.S. economic data, said Alan Gayle, portfolio manager at RidgeWorth Investments.

“There’s a great deal of nervousness around the weakness in China, and that’s overshadowing the fact that the U.S. economy is sound and the European Union economy is firming,” he said.

Sales of existing U.S. homes rose in July to their highest level since 2007. U.S. auto sales, meanwhile, are on track for their best year in a decade.

Attention will return to those domestic metrics as the Federal Reserve begins its annual meeting in Jackson Hole, Wyoming, next week. Investors will be looking for any signs that the central bank is increasingly worried about global issues or whether it is going ahead with what had been a widely-expected interest rate hike in September.

The Fed has said its decision to raise rates will depend on data such as an improving jobs market and housing market. Should the Fed signal that it plans to raise rates, investor sentiment towards the United States and emerging markets may further diverge.

Minutes released Wednesday of the central bank’s most recent meeting revealed Fed officials were concerned about “recent decreases in oil prices and the possibility of adverse spillovers from slower economic growth in China,” a detail which helped spark the selling.

At the same time, North Korea put its troops on war footing Friday after South Korea rejected an ultimatum to halt anti-Pyongyang broadcasts. The prospect of war, or signs of more global worries, could further dampen U.S. stocks in the week ahead.

The slowdown in China and other emerging markets such as Brazil is hurting commodity-related companies, but it is not enough to affect either 2015 or 2016 earnings estimates for the S&P 500 as a whole, said Gina Martin Adams, equity strategist at Wells Fargo. Second-quarter earnings rose 0.1% from a year earlier, an improvement from the expected decline of 3.4%.

Low energy costs should benefit consumer discretionary companies, which Martin Adams expects to grow earnings by 12% for the year, up from her previous forecast of 8%.

Mutual fund managers are also making bets on U.S. companies that get the majority of their revenues from the domestic market. The average large-cap fund is overweight in U.S.-focused companies, including JPMorgan Chase & Co, railroad Union Pacific,, American Express, and Comcast, according to research by Goldman Sachs.

Martin Adams estimates the S&P 500 will reach 2,222 over the next 12 months, an 11% gain from the 1,997 the index reached on midday Friday, after commodity prices bottom and earnings improve.

“The direction of the market is ultimately higher,” she said.

TIME movies

Watch Antonio Banderas in the Trailer for the Chilean Mining Drama The 33

The film also stars Juliette Binoche and James Brolin

On August 5, 2010, the San José copper-gold mine in Copiapó, Chile caved in, trapping 33 miners underground. The story made international headlines as Chilean authorities scrambled to devise a plan to rescue the men. For 69 days, the men survived underground, awaiting rescue, until finally, on October 13, all 33 were brought to safety.

That story heads to the big screen this fall in The 33, starring Antonio Banderas as Mario Sepúlveda, a miner who hosted many of the videos the group sent to the surface during their time underground. The trailer captures the heightened drama of the ordeal for not only the miners—one an expectant father and another just weeks away from retirement—but also their distressed families, waiting above ground for good news.

The 33 hits theaters Nov. 13.

TIME Chile

7 Army Officers Arrested for 1986 Attack on Chilean Democracy Activists

Chilean Carmen Gloria Quintana attends a ceremony marking the 30th anniversary of the Sept. 11 military coup lead by Gen. Augusto Pinochet at the government palace La Moneda, in Santiago on Sept. 11, 2003.
Santiago Llanquin—AP Chilean Carmen Gloria Quintana attends a ceremony marking the 30th anniversary of the Sept. 11 military coup lead by Gen. Augusto Pinochet at the government palace La Moneda, in Santiago on Sept. 11, 2003.

The 29-year-old attack is only now being investigated

Seven Chilean army officers were arrested Tuesday over the brutal 1986 burning of two pro-democracy activists.

During the reign of dictator Augusto Pinochet, two activists were doused with gas by soldiers, then set on fire on July 2, 1986. One, Rodrigo Rojas, an American resident, died from his burns. His fellow activist, Carmen Gloria Quintana, lived but was left severely disfigured.

Rojas was been a student at the Woodrow Wilson School in Washington, D.C. and had just returned to his native Chile to photograph anti-Pinochet protests. He and Quintana were captured, then beaten, splashed with gas, set fire, then dumped outside Santiago, where they were later found by local residents. At the time, Pinochet suggested the two had set themselves on fire.

The nearly-30-year-old case, a hallmark torture case of the Pinochet era, has recently seen new light after decades of being under a “pact of silence.” In 2013, the case was reopened; in 2014, a former army serviceman identified the seven officers allegedly involved in the attack, according to The Guardian.

Quintana, who now works with the Chilean government in diplomacy, said the officers involved in the attacks were acting under orders and should be considered victims themselves.

“The most important thing that has happened is the revelation that inside the army there is an entire system to protect this lie that they created to cover up human rights crimes,” she said.

[The Guardian]

TIME Chile

Chile Declares First Environmental Emergency Since 1999 Over Air Pollution

Smog shrouds Chile's capital Santiago, June 22, 2015.
Ueslei Marcelino—Reuters Smog shrouds Chile's capital Santiago, June 22, 2015.

About 40% of the country's 1.7 million automobiles must be off the road

Air pollution in Santiago is so bad that Chile declared a state of environmental emergency on Monday for the capital and the surrounding metropolitan area.

The decision forces around 40% of the country’s 1.7 million automobiles off the road, Reuters reports, and more than 900 factories must also cease operations. Chile’s first environmental emergency since 1999 is expected to last for 24 hours but can be extended if conditions don’t improve.

“We’re currently facing unusual conditions, with one of the driest Junes in over 40 years as well as really bad air circulation conditions in the Santiago valley in recent days, which boosts the concentration of contamination,” Chile’s Environment Ministry said in a statement.


TIME politics

The Untold Story of How the Reagan Administration Got Rid of Pinochet, Chile’s Ruthless Dictator

Augusto Pinochet
Robert Nickelsberg—The LIFE Images Collection/Getty Chilean leader General Augusto Pinochet, in 1985

It’s a victory story, but a little more complicated than people think

History News Network

This post is in partnership with the History News Network, the website that puts the news into historical perspective. The article below was originally published at HNN.

Throughout the Cold War era the United States periodically confronted the problem of dealing with Latin American allies whose regimes were collapsing due to mismanagement and/or popular disaffection but who were unwilling to relinquish power in ways that provided an opportunity for Washington to influence the political transition in a manner favorable to its interests—politically, economically and regionally. The Reagan administration’s dealings with the military dictatorship of General Augusto Pinochet in Chile, though the regime was not at risk of collapse, is often cited as an exemplary case of a successful democracy promotion strategy. But how was Reagan’s State Department able to pursue this approach and what kind of democratic transition was the administration willing to support?

President Reagan’s publicly declared support for freedom, democracy and human rights generally–a position most comprehensively outlined during a June 1982 address to the British Parliament and directed primarily at the Soviet Union–gave pragmatic conservatives in the State Department an opportunity to contemplate policies beyond the strictures laid down by a group of hardline Cold War warriors who initially monopolized senior foreign policy positions. Their eventual replacement or retirement from Reagan‘s inner circle of advisers provided opportunities to make the case for a policy less driven by reflexive anti-communism. Additional personnel changes during Reagan’s second term further strengthened the position of Secretary of State George Shultz as the President’s most trusted and hence influential foreign policy adviser.

By 1983-84, the resurrection of civil society in Chile produced a consensus among key State Department officials on the need to re-evaluate the administration’s approach to Pinochet. The emergence of social movements in Chile (across the social class, occupational and political spectrum) offering a direct political challenge to the military regime eventually led to a consensus calculation within State that the time had arrived when it might be in the best long-term U.S. interests to promote a return to civilian rule. Regional developments also entered into this policy rethink: transitions from dictatorship to democracy were occurring across much of Latin America to a point where Chile was beginning to stand out like a ‘sore thumb,’ and had become an international pariah with whom the U.S. was most closely identified.

Following Reagan’s inauguration for a second term, the bureaucratic debate over Chile policy moved decisively in favor of Shultz and his key State Department advisers who were opposed to Pinochet’s indefinite rule and keen to see practical steps taken to culminate in a transition to democracy. To achieve what Deputy Assistant Secretary of State for Inter-American Affairs James Michel termed the ultimate goal of facilitating “the emergence of a centrist political consensus and a soft transition into democracy,” State was able to convince Reagan to publicly reject Pinochet’s constant declaration that Chileans faced a stark choice between the order and stability provided by the military and the chaos he associated with his opponents. Not only did this rejection strike a crucial blow at the dictator’s defense of his rule but simultaneously boosted the influence of junta members who had tired of both the military’s adventures into politics and Pinochet’s own ambitions.

Meanwhile, administration officials had settled on a two-track policy approach: on one hand, prodding Pinochet with a mix of quiet diplomacy, public criticism and largely symbolic economic pressures to cajole him to return Chile to a restricted democratic political order; on the other, coaxing ‘anti-regime’ social movements and political parties of the center-right–that Washington associated with moderation,’ ‘dialogue,’ ‘compromise,’ and limited ‘reforms’—and discouraging their involvement with ‘anti-system’ forces of the Left viewed as synonymous with ‘violence,’ ‘polarization,’ ‘radicalization’ and other activities that ‘endangered’ democracy.

Washington’s support for a democratic transition, in other words, did not reflect a sustained and principled commitment to the promotion of democratic norms and values; rather, the application of the policy revealed a highly conditional and qualified support based on calculations that bilateral and regional U.S. interests would be best served by a return to electoral rule but under circumstances that would leave little to chance, much less to ‘democratic adventurism.’ The revival of an inclusive, multiparty system that characterized Chile prior to 1973 was never considered an option warranting U.S. support and encouragement. This approach dovetailed perfectly with the junta’s non-negotiable preconditions for a transfer of power: a civilian governing alternative that would preserve the essential objective of the September 1973 coup — which was to eliminate the threat from the Left – maintain the junta’s political and economic structures, and forego recriminations against the armed forces over their brutal methods of governance.

The Reagan White House was under no circumstances prepared to countenance a re-democratization process that might result in an ‘unacceptable’ segment of the opposition (left social movements and their militant political party allies) from heading a newly elected government. Thus, in contrast to the requests for ‘soft’ changes asked of the junta, U.S. policymakers demanded a wide-ranging set of major concessions from the ‘responsible’ opposition, including acceptance of the legitimacy of the coup and the generals own 1980 Constitution, and the armed forces’ demand for amnesty from prosecution for human right abuses perpetrated during their 15 year rule.

Undeniably, this represented a political victory for the forces that carried out the 1973 military coup and a personal triumph for Pinochet himself. The armed forces presided over a political transition at a time of its own choosing, with its internal cohesion, sense of honor, and institutional power unaffected, if not strengthened; the country was now governed by a popularly elected civilian regime dominated by the moderate and conservative opponents of military rule committed to maintaining generals’ neoliberal economic model; and those opposition forces posing the greatest threat to the state – the social movements of the left – were politically marginalized. If the Reagan White House played a less than decisive role in wresting political power from the armed forces, what ultimately transpired was the best possible outcome from the perspective of U.S. bilateral and regional interests.

Morris Morley and Chris McGillion are co-authors of the just published “Reagan and Pinochet: The Struggle Over U.S. Policy toward Chile”(New York: Cambridge University Press).

TIME Chile

See Chile’s Villarrica Volcano Light Up the Night Sky

The Villarrica Volcano at night in Pucon town, Chile on May 10, 2015.
Cristobal Saavedra—Reuters The Villarrica Volcano at night in Pucon town, Chile on May 10, 2015.

The active volcano glows through the night

The Villarrica Volcano in southern Chile is the most active volcano in South America.

In March the volcano, which is located near the tourist resort Pucon, erupted and caused thousands of people to evacuate. This photograph was taken May 10, and depicts the view of the volcano from the city.

TIME Chile

See 9 Stunning Photos From the Volcano Eruption in Chile

It was the volcano's first eruption in more than four decades

Last week’s eruption of the Calbuco volcano in Chile was its first in more than four decades. Officials issued a red alert for a nearby city, Puerto Montt, and evacuated more than 1,500 people in a six-mile radius of the volcano—some 600 miles south of Santiago—as ash began to spew into the air.

Read next: Life and Death in One Picture After Quake Hits Nepal

Listen to the most important stories of the day.

TIME Chile

See the Eruption of Chile’s Calbuco Volcano Paint the Sky

The Chilean Calbuco volcano seen from Puerto Montt, located 600 miles south of Santiago de Chile, Chile on April 22, 2015. The eruption caused a column of smoke over ten miles high. Authorities declared a red alert and ordered the evacuation of around 1500 residents in the area surrounding the volcano.
Alex Vidal Brecas—EPA The Chilean Calbuco volcano seen from Puerto Montt, located 600 miles south of Santiago de Chile, Chile on April 22, 2015. The eruption caused a column of smoke over ten miles high. Authorities declared a red alert and ordered the evacuation of around 1500 residents in the area surrounding the volcano.

Its last known eruption was in 1972

The Calbuco volcano in Chile erupted for the first time in more than four decades on Wednesday, prompting officials to issue a red alert for the city of Puerto Montt. Authorities evacuated around 1,500 residents within a six-mile radius of the volcano after it spewed ash into the air, according to the Associated Press. The volcano, located some 600 miles south of the capital, Santiago, last erupted in 1972.

This is the second eruption in Chile this spring. In early March, the Villarrica volcano expelled ash and lava. Chile has the second-largest chain of volcanos in the world, following Indonesia.

TIME Chile

Heavy Rains Wreak Havoc in Northern Chile, One of the Driest Places on Earth

Residents watch the rising flood waters of the Copiapo River, in Copiapo, Chile, March 25, 2015
Aton Chile—AP Residents watch the rising flood waters of the Copiapo River, in Copiapo, Chile, March 25, 2015

Officials order evacuation ahead of further storms

Heavy rains in the Andes sent flash floods through Chile’s Atacama desert Tuesday evening, leaving thousands without power or running water. The area is normally one of the driest in the world.

Overwhelmed by runoff, the river that runs through Copiapo, Atacama’s capital city, overflowed its banks with more rain predicted over the next 12 hours.

Authorities, fearful of mudslides, urged locals to seek safety elsewhere. Interior Minister Rodrigo Penailillo advised “anyone in an at-risk zone in the Atacama region” to evacuate, the BBC reports.

Northern coastal towns were hit especially hard. The government described the coastal town of Chañaral as in a “critical” state, while the Antofagasta and Coquimbo regions were affected seriously enough to warrant health alerts.

Military units were deployed in Copiapo to lend assistance, and President Michelle Bachelet rearranged her schedule in order to fly to the besieged city.

Along with causing widespread flooding, the rainstorms also washed out roads and disrupted communications. Local officials say 38,000 residents are without power and 48,000 are without potable water.

TIME Chile

Forest Fire Rages in Chilean Port City

Alberto Miranda San Martin—AFP/Getty Images Smoke billows from the forest around Valparaiso in Chile, March 13, 2015.

The number of people being evacuated could rise to 16,000

SANTIAGO – Thousands of people were evacuated from around the Chilean port city of Valparaiso on Friday as a forest fire raged out of control, emergency service agency Onemi said.

Some 4,500 people were being evacuated from Valparaiso and neighboring Vina del Mar and a state of emergency had been declared, Onemi said.

The fire was advancing rapidly, and the numbers being evacuated could rise to 16,000, depending on how the fire progressed, the interior ministry said.
Three firefighters were taken to hospital with injuries and one woman died of cardio-respiratory causes, it said. The fire had begun in a rubbish dump and had burnt some 260 hectares…

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