Asian FX weakness is back, and the USD/Gold correlation has turned positive. This begs the question: How does it rhyme with the continued surge higher in gold, and has something fundamentally changed?
Emerging Markets
The ‘Emerging Markets’ series is a weekly editorial which delves into the most timely and relevant news and movements from and relevant to emerging markets.
As part of our comprehensive research offering, this series provides actionable insights and analysis on all things EM, examining both the dynamics that shape these vibrant and rapidly evolving economies as well as the reverberations for global financial markets.
EM Watch: China is preparing something BIG!
The strategic shift from Real Estate to Green-tech manufacturing in China is very evident and it will likely impact Europe to a much larger extent than the US. Counterintuitively, it means that two of the strongest inflation hedges stem from China and Mexico simultaneously. Here is why!
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Emerging Markets: Legs to the Korea case or time to cash in?
Korea has, by first-hand experience, been a sell-side favorite, and the Kospi has been on a roll recently. Some leading cyclical indicators have started to turn however, and the question is then whether to book some profits in the region?
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Reflation Watch: Has Japan turned a page, and have markets gotten ahead of themselves?
The BoJ delivered a historical hike – its first in 17 years – last week. Does this mark the turning point for Japan for good, or do risks still linger?
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Chinese Momentum: Driving Markets or a Crowded Consensus?
China’s vehicle of choice in achieving its growth targets has long been real estate. With RE still in shambles, will manufacturing be the stand in, and has the market in fact crowded out the China case?
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Rotating EM Flows: From Japan to Emerging Asia
Japan has reemerged as a feasible investment these last years, but is the driving force of this performance ebbing, as China returns to the table? A look at the relative winners and losers if China in fact is returning.
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EM Stimulus Showdown: From Beijing with Boost to EM?
As indicators point to pro-cyclical US manufacturing trends, emerging markets are poised to catch the wave of economic momentum. We take a closer look at EM sensitivities and potentialities in this early tide.
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EM Cycle Watch: South Korea a good buy?
Amidst some EARLY resurgence in China and signs of cyclical rebound, South Korea looks increasingly compelling. Could this convergence of factors signal a strategic entry point into South Korea’s manufacturing and AI-focused market?
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China Watch: Trading the latest rate cut stimulus
Was Tuesday’s aggressive stimulus just the PBoC’s latest desperate attempt, or was it in fact enough to get the distraught property sector and broader economy back on track? Our interpretation of the mixed signals here.
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EM by EM #43: Rand’s Reckoning?
The latest US CPI data clearly indicates that inflation in the US is not yet defeated. With interest rate cuts anticipated further down the line here is our perspective on EM’s
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EM by EM #42 China could do with a cold Turkey
While all the hype in EM is about China these days, we are healthy skeptics. We’d like to see Beijing adopt a more structural approach to truly win us over, similar to what they’re doing in Turkey
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EM by EM #41: Fearing the Fury but Fading the Fear
Buy the fear and sell the hype is our overarching mantra in EM these days. Read how below!
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EM by EM #40: Chinese Promises and Mexican Traps
As we conclude a busy midweek with loads of matter to digest in a global macro we will this week attempt to make an odd synthesis between the recent events in China its importance for price action and how we look at it going forward and Trump’s success in New Hampshire and how we are currently framing the 2016 campaign in the context of the EM space
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EM by EM #39: All roads out of China lead to goods disinflation
Geopolitics and fiscal excess are fueling price pressures in global macro. But there’s one actor that could combine the two and undermine the inflationary momentum
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EM by EM #38: Inflation returning with a vengeance?
As the US CPI is set to maintain its resilience, several sectors are contending with margin pressure due to the slower decline in costs. In the world of emerging markets, the soft landing appears to be losing steam, running on fumes. Meanwhile, finance ministers are once again in the limelight as 2024 unfolds as a pivotal election year globally
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EM by EM #37: The Taiwan election & the Trade war
The upcoming Taiwan election is just one chapter in the larger narrative of US-Sino relations, which is poised to return to the forefront of financial markets in the 2024 US election year. Will Taipei further contribute to the rising tension?
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EM by EM #36: What Goldman got wrong about China in 2023
We, just like Goldman Sachs and many others, have been caught off guard in China over the past year. Here’s why
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EM by EM #35: China 2024: Keeping the beast alive
With investor sentiment through the floor in China, we take a look at the policy tool kit for 2024. Is China set for a rebound or will the sentiment remain stuck in the abyss?
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EM by EM #34: Xi’s whip and Powell’s kneeling
After tonight’s press conference, any doubt about who is driving monetary policy should be dispelled. Powell appears to be allowing the market to dictate and is hesitant to provide significant guidance, in stark contrast to Xi and China, which seem somewhat immobilized yet hesitant to acknowledge reality
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EM by EM #33: Early Hikers = Early Steepeners?
Forward curves continue to trend lower in the US and Eurozone. The early adopters are leading the way, but perhaps Yellen’s spending spree will pose another challenge for her EM colleagues. We have taken a look at potential receiver/steepener cases in EM space.
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EM by EM #32: Keep calm & Carry Lira?
Turkey is teetering on the edge of normalization, but the Lira’s stability remains in jeopardy as Erdogan manages a difficult situation, albeit from a reasonably advantageous position.
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EM by EM #31: It’s time for Milei to grapple with the real world
We still don’t have much faith in Argentine dollarization, and it seems that the markets have jumped the gun. The real question is whether Milei has also followed suit?
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EM by EM #30 Pick-up from King Carry?
China is still in a state of crisis but perhaps recent dove-vibe in the US could sustain the run of some of the 2023 FX winners? Read our take below
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EM by EM #29: Biden’s party, EM’s hangover & Scholz’s nightmare
The recent howler of 30y UST auction made yields spike and has served as a reality check for the brief optimism in emerging markets. But we refuese to concede to the negativity – We illustrate the long-term prospects for Latin America in the new deglobalized order below
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EM by EM #28 The Truth Hidden in Plain Sight
The Chinese Stimulus will likely prove to be false flag and Yellen & Powell looks to have killed the USD streak. Read below for our thoughts on it and how we will likely play it
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EM by EM #27 Not a Bazooka, but a Pumpgun
The long awaited stimulus package is here! But it is anything but overwhelming… Read our takeaways here
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EM by EM #26: Biden, Blinken, Barrels & Beijing
It is increasingly impossible to dissect what is going on in financial markets from what is taking place on the Geopolitical scene. Read below for our full take on the latest events
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EM by EM #25 Lighting the fuse in the Middle East?
This past week has been historical for all the wrong reasons. But could the horror taking place in the Middle East be the last nail in the Coffin for US economic overperformance?
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EM by EM #24 Tightening the noose on EM
Oil prices have collapsed in recent days undermining one side of the USD/Oil wreckingball. Good news for EM’s generally? We offer our takeaway below and how we prefer to play it
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EM by EM #23 Playing the least dirty laundry vs the dirtiest
When things seem to be spiraling downwards, trades that capitalize on relative weakness often present favorable risk-to-reward opportunities. We’ve recently entered such a trade ourselves
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