Iceland Update

The markets in Iceland have been doing well lately, benefiting from the global liquidity that seems to be helping many markets these days.

This is a YTD chart that shows the ICEX Index up about 20% and the dollar being down 10% against the Icelandic currency.

Some of the the trade numbers and inflation data that make this investment destination so risky have improved of late which helps but I think global liquidity is the bigger story this year. I still think in the longer run Iceland will play a bigger economic role (not dominant, just bigger) than it does now.

I think the biggest immediate threat to global markets is anything that rains on the liquidity parade. Any event along these lines should be expected to hit Iceland along with other high yielding deficit countries.