What Has Changed in EM

  • China announced retaliatory tariffs on $75 bln of US goods
  • Bank Indonesia delivered a dovish surprise and cut rates 25 bp to 5.5%
  • Japan-Korea relations continue to deteriorate
  • Turkey’s central bank loosened policy by easing reserve requirements
  • South Africa government will announce plans to reduce debt and spending at its mid-term budget review in October
  • Argentina Economy Minister Dujovne resigned last weekend
  • Brazil plans to accelerate the sale of state-owned assets Continue reading “What Has Changed in EM”

DM Equity Allocation Model For Q3 2019

We recently introduced our Developed Markets (DM) Equity Allocation model. Building on the success of our EM model, this new framework extends our analysis to cover 24 DM equity markets. Our analysis is meant to assist global equity investors in assessing relative sovereign risk and optimal asset allocation across countries within the DM universe. Continue reading “DM Equity Allocation Model For Q3 2019”

UK Brexit Scenarios Narrowing

The odds of a hard Brexit are getting alarmingly high. Here, we set forth some possible scenarios as to what may unfold ahead of the October 31 deadline. The most likely outcomes are not good and so we see UK assets continuing to underperform. Continue reading “UK Brexit Scenarios Narrowing”

Turkish Policymakers Flirting With Disaster

Turkey’s central bank just loosened policy by easing some reserve requirements. Coming ahead of the policy meeting September 12, the move suggests the bank will cut aggressively then. Confidence in policymaking remains low even as the economy is mired in recession, and so we expect Turkish assets to continue underperforming. Continue reading “Turkish Policymakers Flirting With Disaster”

Thoughts on the Fed Ahead of Its Jackson Hole Symposium

There has been a noticeable lack of verbal guidance from Fed officials since the July 31 FOMC meeting. That makes FOMC minutes Wednesday and the Jackson Hole Symposium starting Thursday even more important. That said, we do not think the Fed will paint itself into another corner given continued firmness in the US data. Continue reading “Thoughts on the Fed Ahead of Its Jackson Hole Symposium”

Drivers for the Week Ahead

  • The dollar continues to climb
  • FOMC minutes will be released Wednesday; this week also sees the annual Fed symposium in Jackson Hole
  • US data this week is minor; the picture painted last week by the US data is a good one
  • Markit flash eurozone August PMI readings and ECB account of its July 25 meeting will be released Thursday
  • Key Asian trade data will be seen this week; Bank Indonesia meets Thursday and is expected to keep rates steady at 5.75% Continue reading “Drivers for the Week Ahead”

EM Preview for the Week Ahead

EM is likely to remain under pressure.  Despite some signs of a slight thaw in US-China relations, a trade deal remains far off and so global growth and trade are likely to see continued downside risks.  Continue reading “EM Preview for the Week Ahead”

What Has Changed in EM

  • China said it will impose retaliatory measures on the US
  • Bank of Israel may change its FX program by eliminating its sterilization
  • Argentina central bank changed FX rules for commercial banks that will lead to some forced dollar selling
  • Argentina President Macri is lurching left in response to his huge primary loss
  • Brazil central bank tweaked its FX program
  • Banco de Mexico delivered a dovish surprise and cut rates 25 bp to 8.0% Continue reading “What Has Changed in EM”

Some Thoughts on Hong Kong

Political tensions in Hong Kong are nearing a boiling point. If mainland China police forces go into Hong Kong, then all bets are off. That is not our base case and so our investment outlook hinges on some sort of negotiated political settlement occurring. Continue reading “Some Thoughts on Hong Kong”