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...
by Bill | Aug 5, 2015 | Emerging Markets
We discussed in April that global reserve assets had begun to fall on an annual basis. This has continued, and the level of contraction is now as great as it has been since at least 2004. Capital flight from EM is gathering pace as growth slows and fear mounts over...
by Bill | Apr 22, 2015 | Emerging Markets
Excerpt from VP Tactical first published on 14th April 2014: We have been flagging Turkey as our top candidate for a currency crisis since we released our Understanding Debt and Currency Crisis thematic in 3Q14. Although the lira has collapsed from 2.15 then to 2.65...
by Bill | Jan 14, 2015 | Asia, Emerging Markets
A weak oil price and a strong dollar rally will put pressure on emerging markets, but valuations for many emerging markets should soon be compelling. Emerging markets have been in a downtrend relative to the S&P since 2010. We will likely see further weakness...
