Copper has bounced small today after a -8% pullback in last three days largely due to China credit fears and the impact this will have on inventory used as collateral for loans. The other side of this story is that copper supply dynamics are also getting worse. Copper production in the 4Q was +12% y/y and there is fear this could go higher.
Lots of strategizing to do into the this weekend and the events expected in Crimea. I’m not sure the trade is to short Russia at these levels. Russia currently trades at 0.53x P/B e’14 and 5.54X ‘e’14 PE. These levels are extreme even by the Russian standard which is always one of overshoot. So despite the prospect of weekend events that only further isolate Russia and pressure on the MICEX Index, we are not advocating selling Russia but rather…
Good Morning on this Wednesday March 12. U.S. markets as well global markets open down.
We may be nearing a top in the Emerging Money Global Emerging Index (EMEGI).
EU volatility spiked back to levels of last Monday intraday before settling down but didn’t give up gains of last few days.
As I talk to seasoned EM veterans who have been focused on this asset class for 15-20 years through a myriad of political, economic and global macro cycles I am increasingly hearing more and more pessimism on whether investors are finally losing their interest in EM. Hard to believe that people who sat in remote locations around the world in 1998 after the Asian crisis moved into the Russian crisis and LTCM blowing up, are NOW in need of trip to the psychiatrist to review their calling in life.
Emerging markets are down about 90 basis points in line with the sentiment on China. China sentiment deteriorated rapidly over the weekend sending the Shanghai below the sentimental levels of 2000. Tune in as I review the Yuan, commodities and economic data. Find out how we are trading the emerging markets.
Analysis of capital flows is a fundamental part of being an investor in EM. What do the flows mean, what are the trends, where are they leading??? The data we have endured in the last 6-8 weeks in EM is nothing short of remarkably bad.