Tuesday, September 4, 2018 9:59 AM EDT
I had the privilege of being on the Bloomberg set with Tom Keene and Francine Lacqua earlier today. Lakshman Achuthan, co-founder of ECRI also joined us for the discussion.
This 6.5 min video clip captures the essence of the discussion. The US dollar was rallying against all the major and most EM currencies. The second consecutive quarterly economic contraction in South Africa pushed the rand down the most in the EM space, but Turkey was also under pressure. India's rupee also fell to new record lows.
I tend to emphasize the policy mix, rate differentials, trade tensions, and idiosyncratic (policy mistakes) as the main driver. Achuthan emphasized the weakness in the global manufacturing, for which many emerging markets are particularly sensitive. It is difficult for me to envision a strong recovery in emerging markets as an asset class until investors feel more comfortable that the Fed's tightening cycle is complete or nearly so.
Video Length: 00:06:35
Read more by Marc on his site Marc to Market.
Disclaimer: Opinions expressed are solely of the author’s, based on current ...
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Read more by Marc on his site Marc to Market.
Disclaimer: Opinions expressed are solely of the author’s, based on current market conditions, and are subject to change without notice. These opinions are not intended to predict or guarantee the future performance of any currencies or markets. This material is for informational purposes only and should not be construed as research or as investment, legal or tax advice, nor should it be considered information sufficient upon which to base an investment decision. Further, this communication should not be deemed as a recommendation to invest or not to invest in any country or to undertake any specific position or transaction in any currency.
There are risks associated with foreign currency investing, including but not limited to the use of leverage, which may accelerate the velocity of potential losses. Foreign currencies are subject to rapid price fluctuations due to adverse political, social and economic developments. These risks are greater for currencies in emerging markets than for those in more developed countries. Foreign currency transactions may not be suitable for all investors, depending on their financial sophistication and investment objectives. You should seek the services of an appropriate professional in connection with such matters.
The information contained herein has been obtained from sources believed to be reliable, but is not necessarily complete in its accuracy and cannot be guaranteed.
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