Buy the fear and sell the hype is our overarching mantra in EM these days. Read how below!
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 #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 #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 #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 #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 #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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Portfolio Watch: No Quarter and No Surrender
The EIA report indicates demand drop, Non-farm payroll signals a soft landing, and we’ve taken a spread trade loss. We’re in challenging waters. How should we position ourselves, and how are we doing? Read our weekly Portfolio review below
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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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EM by EM #22 The Good, the bad and the ugly
FED is pausing but EM’s are already fed up and the dynamics of the 2022-trade remains our frame of guidance. But what could turn the table?
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EM by EM #21 Why China is uninvestable yet tough to short
7.30 was the line in the sand but can the Chinese defend their thench? We find it unlikely. But the battleground is not a safe place yet
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EM by EM #20 Another energy squeeze in the cards?
Emerging market central banks demonstrated their foresight in 2021, acting ahead of the curve. However, there is a looming concern that the resurgence in energy prices might pose a challenge for them, much like it did in 2022.
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EM by EM #19 The Simsek Effect kicking in?
The Turkish central bank hiked the interest rates by 750 basis points against the market expectations of 200 bp underlying this month and both stocks & lira rallied on the back of it. Where is the Turkey case heading from here? Read our view here
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EM by EM #18 – Why Jackson Hole is more important than Johannesburg
Finance Journos are busy flying this week. But what is going on with BRICS & the FED? EM’s care more about the latter this week
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EM BY EM #17 China: Real Estate Complex and the “phony” stimulus
In 2021, I took a bearish position in the Chinese real estate market. However, the scale of the repercussions stemming from the ongoing deleveraging process in Chinese real estate has raised our concerns. Despite this, we believe that the CCP will likely need to intervene in the near term to address the situation
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EM BY EM #16 Counting coppers and rating cuts
FED & ECB near peak policy rate and UST curve seems to be steepening. Meanwhile, the Chinese are still late with their stimulus package. Where does that leave EM FX? We give our general assessment here.
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EM BY EM #15 – Ecuador General Election as a catalyst?
Plenty of bets in LatAm carry trades unwound this week on the back of BoJ YCC tweak. But perhaps the LatAmsphere has a USD winner short term?
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EM by EM #13 – A sweetspot for Brazilian Equities?
We have been bullish on Brazil for months and got the market and timing right. But what about Brazilian stocks? Could they prove to be a buy here?
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EM by EM #12 – Is the surging Peso a prelude for a longer Mexico bull case?
Many have profited from MXN carry in the first half of 2023. But is there more left to squeeze out or is it running on fumes? We give our take here and assess the structural patterns at play in Mexico in relation to recent performance and the geopolitical climate.
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EM BY EM #11 Hangover after the Gold rush?
Gold has enjoyed a revival on the back of inflation and monetary expansion. But what happens when the tailwinds disappear?
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EM BY EM #10 2021 in reverse: Will EM Central banks outsmart DM’s once again?
2021 will be remembered as a great policy error year at the FED and the ECB. But other central banks saw the inflation coming. Will they be in front of the curve again in 2023?
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EM by EM #9 The EM proxy crime and when to commit it
As a new addition to our editorial, I will now provide a monthly overview of emerging markets, taking a step back from the intricacies and offering a broader perspective. The purpose of this feature is to outline our current positioning within the market cycle and highlight the key factors we are monitoring surrounding EM.
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EM by EM #8 The Indian elephant in the room- will it keep holding up?
In this current cycle, India has emerged as a favorite among emerging market investors. But are we seeing a bubble similar to Japan in the 1980s? Or will India be successful in replicating the success of China? While we maintain a positive outlook – India counterintuitively is not cheap.
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EM by EM #7 Is Turkey to TRY a pivot?
As the Lira is trying to outcompete the depreciation of the Venezuelan Bolivar and the volatility of dogecoin, we provide our view and assessment of the near-term impact of Erdogan’s narrow victory. Markets were not impressed by the outcome but will the skepticism remain the prevailing narrative?
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EM by EM #6 – is Brazil still attractive?
Having commenced this series with a bullish perspective on Brazil, it has now been approximately two months since my initial analysis. As I reassess the situation, I contemplate whether the trade is losing momentum or if there are still untapped profits to be seized.
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EM by EM #5 Stairs up and elevator down in China?
As the markets evolve, we adapt accordingly. Although the reopening of China’s economy is still ongoing, the optimism surrounding it is gradually diminishing. Simultaneously, the worsening economic data from Western countries indicate a significant slowdown. With the once-promising light at the end of the tunnel slowly fading away so do the flows. In this short piece we reveal our new position
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EM by EM #4 – Argentina and the real de-dollarisation
In recent weeks, social media and leading financial media have been flooded with sensational articles about the dollar’s demise. In this piece, I will provide an analysis of the actual immediate obstacles facing the American dollar where USD hegemony is being undermined. Given the current US debt ceiling theater, one can scarcely think of a better point of reference than the debt default champion of the Western hemisphere: Argentina
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EM by EM #1 – Time to buy Brazilian sovereigns?
While the global macro wheel is heading for a slowdown, could Lula prove to be the least anticipated fiscal hawk given the current state of affairs?
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Asset Allocation Watch – How to exactly position for USD weakness?
Last week we released our first edition of the ‘Dollar O’ Meter’ which sat out to probe the USD and its relative strength (or weakness). Without giving too much away, we find conviction that further weakness in the USD is up ahead in the next few months. If we are correct, how should one then position for such a circumstance?
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