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May 02, 2012, 02.07 PM IST | Source: CNBC-TV18

Expect emerging markets to struggle in May: Richard Ross

In an interview to CNBC-TV18, Richard Ross, Auerbach Grayson says, it’s a nice start, but it doesn’t mean this is where we are going to finish. In May, he says, volatility is going to pick-up. "I would expect the newsflow in Europe to continue to come in which will create an overhang, emerging markets continue to struggle," he adds.

The Dow closed at its highest level in more than four years in a broad rally on Tuesday after US manufacturing expanded at a faster pace than expected in April, easing jitters about a slowdown in the economic recovery.

In an interview to CNBC-TV18, Richard Ross, Auerbach Grayson says, it's a nice start, but it doesn’t mean this is where we are going to finish. "Investors are choosing to go with the momentum, focus on the strong data point that we continue to see in the US," he adds.

In May, he says, volatility is going to pick-up. "We did see sentiment shift to the bearish side as around the month of April, but counter intuitively that shift in sentiment can actually be bullish. We could continue to see people push these markets higher in US. I would expect the newsflow in Europe to continue to come in which will create an overhang, emerging markets continue to struggle," he adds.

Below is the edited transcript of his interview on CNBC-TV18. Also watch the accompanying video.

Q: What happened to sell in May and go away?

A: The markets are up to a very nice start, seeing some really nice gains across the board financials, and technology. So, it is a very bullish start to the month.

Q: What do you put this down to because Spain hasn't gone away, those problems continue, unless it’s just the manufacturing data that’s providing a one-day blip up?

A: I think that's a great point. Clearly, I think investors are getting their arms around the fact that these problems in Europe are not going to go away any time soon. But in the mean time, the data as we continue to see in the US with today's strong manufacturing report over the month of April continues to be positive. So, investors are choosing to go with the momentum, focus on the strong data point that we continue to see in the US. They are continuing to put those concerns around global growth as they pertain to Europe on the backburner.

Q: April turned out to be a very difficult month. What do you expect from May?

A: We are going to see volatility pick-up. We did see sentiment shift to the bearish side as around the month of April, but counter intuitively that shift in sentiment can actually be bullish. We could continue to see people push these markets higher in US. But once again I think we are going to see volatility pick-up.

It’s a nice start, but it doesn’t mean this is where we are going to finish. Keep in mind that we do have fund flows that come in to the market around that first of the month. So, once again it’s a very optimistic start, but I would expect volatility to pick up. I would expect the newsflow in Europe to continue to come in which will create an overhang, emerging markets continue to struggle. The cross currants between the dollar and the euro and then some of our foreign currencies, our Australian dollar, our Brazilian real and the rupee continue to weaken. So, a lot of cross currants are out there.

READ MORE ON  US, Markets, Europe, Dow, Nasdaq, S&P 500, Richard Ross

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