Good morning from a snowy New York this Thursday February 13. Emerging markets are under performing global markets this morning on weaker data across the board including key data points in emerging markets. Tune in to hear what we are looking out for and how emerging market currencies are reacting.
While printing 74K on Non-Farm Payroll report (NFP) today in the U.S. gives a temporary momentum boost to flagging spirits in emerging markets, it is not worth discussing other than in the context of what is moving markets today.
In state polls last night in India the opposition party won a stunning upset in areas that hold about 200 million people.
Recent polls out of Sao Paulo show that only 30% vs. 51% in last survey intend to vote for President Dilma’s in the Oct 2014 elections which suddenly are looming.
I made it clear on Monday night’s Fast Money that emerging markets are oversold despite tapering concerns and China possibly in tightening mode, and this was trading opportunity at a minimum.
Brazilian real (BZF, quote) unable to hold its gains after removal of the IOF tax. After being 1.4% higher this morning, the currency is almost flat. This lack of follow through on removing a tax that was major news when they announced it is disappointing but not surprising on both a Brazil level and an emerging market level overall.
With an aggressive 50bp hike in the COPOM rate, the Brazilian Central Bank (BCB) may have put the brakes on the runaway train that was the Brazil Reel (BRL) this week.
Petrobras (PBR, quote) issuing $11 billion in debt to set a record for an emerging markets debt offering. The company is using the opportunity of negative real rates in Brazil (officially no, but in terms of true cost of living, YES), and most of the world to tap a global debt market starving for yield.
My top ten reasons to be scared: