by Simon White | Nov 14, 2017 | Emerging Markets
Each month, we produce a report which we call our Leading Indicator Watch. In it we update all our main leading indicators that give us leads on global growth, liquidity, commodities, US growth, US consumption, US manufacturing, corporate profits, volatility and...
by Simon White | Oct 9, 2017 | Emerging Markets, European Economy
Rate differentials are a key driver of FX moves, and we look at rate differentials by adjusting for the effects of both inflation and embedded risk in the market. We do this by looking at 2y nominal-rate differentials, adjusted for CPI and then divided by the implied...
by Simon White | Aug 5, 2017 | Emerging Markets, Global Economy
The macro-economic landscape has profoundly changed since the financial crisis. Developed markets deleveraged, and emerging markets became the engine of global credit and money growth. The top-left chart from the BIS shows this very clearly. EMEs (emerging market...
by Bill | May 12, 2017 | Emerging Markets
Liquidity conditions have deteriorated meaningfully for EM equities. The left chart below shows that the steep drop in G7 Excess Liquidity points to a risk of much lower EM equity prices in about 3-4 months’ time. This materially worse backdrop for EM equities is...
by Bill | Dec 16, 2016 | Emerging Markets
In the past few monthlies we’ve warned that a strong dollar has the potential to cause emerging market crises. From a valuation standpoint, the dollar is very overvalued against almost all currencies, but rising interest rates and the appreciating momentum may drive...
by Bill | Dec 9, 2016 | Emerging Markets
One of the main promises of Trump’s campaign was building a wall with Mexico that the Mexicans would pay for as well as renegotiating NAFTA. Mexico’s stock market in dollar terms is now back to 2009-10 levels. Investors are pricing in an awful lot of bad news. ...
by Bill | Nov 18, 2016 | Emerging Markets
(from our Tactical report of 8th November 2016) Flows to EM equities have been high lately (3m flows over last 2 years to EM ETFs are in their 80th percentile – chart below). Source: Macrobond, Bloomberg and Variant Perception The rise in the USD is a risk to these...
by Bill | May 25, 2016 | Emerging Markets
We turned bullish on Brazil back in February. Our leading indicators had been turning up, the effects of previous Selic hikes had begun to recede, and we expected inflation would fall, opening up the path for interest-rate cuts. Year-to-date, Brazil has delivered...
by Bill | Dec 3, 2015 | Emerging Markets
Capital outflows from emerging markets continued into the second quarter of 2015. Once again the outflows mainly emanated from China and from CEE and Russia. The flipside is growth Treasuries held in custody for foreign accounts is stuck at zero percent. This is a...
