Good afternoon Emerging Money readers. Tune in as I recap key events from the week, evaluate current Emerging Markets along with commodities and which one commodity I’d own. I’ll also cover Emerging Market currencies and review how the Fed is affecting the FOREX market.
At Emerging Money we have written significantly on Turkey and discussed the challenges of their macro struggles. In short, we have guided investors towards a view that Turkey is not broken but will be noisy on politics and that the investment time horizon will be over the next 12 months, not 12 weeks.
As a witty Twitter follower hit me after I poked fun of the late call: “..and in other news the S&P picks Seahawks for the Superbowl”.
That is the statement I heard from a wise man said to me today. So simple, yet the torrent of sentimental rain upon emerging markets for the last few weeks has seemed as if casual observers are throwing in the towel.
The Emerging Money EM FX Basket (EMFXB) is a GDP weighted index comprised of the eight most volatile primary currencies in EM.
Last night the CBT hiked rates in the O/N “corridor” and in the primary lending market.
In Turkey today, the CBT announced in the middle of the morning session that they would conduct an emergency meeting tomorrow which has in turn sparked a (short covering?) rally in the currency.
Those EM “have’s” with exposure to either falling commodities, current account issues, political turmoil, or all of the above, are taking down all EM countries, even those who do not have (“have not”) the same exposure to such factors.
EM down 5% since the surprise China PMI contracting print.