We have refrained from calling a rebound in inflation as China was weakening. What if that’s no longer the base case?
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.
China/Germany Flash Watch: How will China navigate the Trump victory?
The Trump trade is roaring in financial markets, but how will China navigate the turbulence? Should we expect a major fiscal announcement on Friday, or perhaps a conciliatory approach to try and avoid tariffs? And what is happening in German politics?
China Watch: This is NOT stimulus. It’s a debt swap!
The stimulus being prepared by the NPC for announcement next week seems more like the work of a marketing agency than an economic council. While the numbers are substantial, it’s more of a debt swap than a true stimulus package. Here’s why!
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China Watch: No more stimulus until the USD allows for it
Chinese GDP trends are being masked by a significant inventory build-up, as electric vehicles pile up in parking lots across China, and to some extent, in the West. China urgently needs a weaker USD to continue its easing efforts.
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China Watch: Elevator Up, Elevator Down… The Most Hated Rally in History?
We saw the worst day in the Hang Seng since Lehman yesterday, but China used the opportunity to “feed the rally” with something to look forward to—a briefing on fiscal stimulus on Oct 12. Here is a comprehensive overview of the far-from-impressive stimulus announced thus far.
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China Watch: Bringing chopsticks to a gun-fight (again)
This is yet another false flag from China, and we expect the stimulus to be insubstantial in size relative to the problem at hand. In this analysis, we will explain why China is allocating insufficient funds to address a major issue.
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EM Watch: 5 Charts on the Nosediving Chinese Indicators!
The Chinese momentum has come to a sudden halt, and we think it is related to the front-loading of imports due to tariff fears. Could China become the victim of a wait-and-see approach until after New Years?
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EM Watch: Why China is trying to wreak havoc on your Gold longs
The Fed looks likely to commence a cutting cycle in September, but can we use the typical cutting cycle playbook in EM- fixed income and Commodities? China is (potentially) wreaking havoc with the playbook!
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EM Watch: Knock-outing the EM darlings, while inflation is returning in EM space
The current sell-off is driven by position squaring not least in USDJPY. The turning tide on USDJPY will impact the EM space largely and also knock-out a few EM darlings in commodity space!
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EM Watch: China FLOODS global copper markets amidst the plenum
Exports of Copper from China are THROUGH THE ROOF, which is a strong hint that the local consumption is on the floor. The CCP plenum has not addressed the short-term activity, meaning that the West will be flooded with Copper now.
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EM Watch – No fiscal stimulus from China as long as export-business is thriving!
We don’t expect the third Chinese plenum to bring about newsworthy stimulus as the rebound in the export-sectors is rock-solid postponing the need for radical fiscal action. This leaves metals vulnerable still.
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EM Watch: A Chinese tale of two very different realities
Will China finally be aided by the USD side of the equation now that pressures on the CNY are stronger than seen at all since the pandemic? The Chinese economy is still navigating a strong export momentum and a terrible domestic momentum
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EM Watch: Western investors are tired of China and Japan “crying wolf”
The JPY is once again suffering from a weak CNY, and the metals trade is not performing despite FX debasement risks in Asia. Have markets gotten tired of the co-ordinated “cry wolf” rhetoric from Asian monetary authorities?
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EM Watch: Is the Chinese copper demand down 40%?
The Chinese apparent copper consumption is absolutely on the floor, while the copper market is turning bid again. Is the Chinese consensus getting too upbeat again? And how will it market in the West during the summer?
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EM Watch: Is China making a fool out of Western metals speculants?
We are still observing China’s next moves in the copper market, as inventories at Chinese exchanges are booming while they are running low in the West. Meanwhile, our studies reveal that the physical demand in China is absolutely on the floor!
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EM Watch: The China bet and the copper story are both old hat by now
The short-term macro bet on the Chinese build-up of copper reserves seems more than exhausted. Cluster risks remain excessive in copper contracts maturing in July, while Lat-Am could be an interesting middleman bet in the meantime.
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EM Gold Rush: The pressure valve amid Asian FX debasement risks?
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?
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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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