Friday, August 10, 2018

So...What's Up With Emerging Markets?

"It's a F**king Bloodbath"
And I am outta here.
Via ZeroHedge 

"It's a F**king Bloodbath" - Emerging Markets Collapse As Turkey Tantrum Spread
Throughout July, many sell-side analysts saw the 'stability' in EM assets as a sign that the worst was over and urged investors to pile back in to take advantage of 'blood on the streets' in EM at these cheap levels.

But, as one veteran EM trader in Brazil exclaimed to us this morning "this is a fucking bloodbath," adding that "liquidity has disappeared" and as spooked retail investors pile out of ETFs (that their advisers said were no brainers), the pressure in real markets is explosive.
Emerging Market FX is indeed a bloodbath...
While Turkey's Lira is the biggest loser on the week (and day), no matter where you look, it's carnage...
The moves are massive but dwarved by Lira...


It's starting to look like a neo-Gramscian March Through the Institutions but with more stomping around.

Grantham Mayo Van Otterloo Quarterly Letter: Q2 2018
Emerging Markets—No Reward Without Risk...
EM, Cash May Be Best Spots for the Next 7 Years, Says GMO
See also:
Feb 2010   
"Grantham’s ‘Horrifically Early’ Calls Challenge GMO" 

"Energing market speculation tends to appear at a juncture in the economic cycle when 
declining yields on domestic bonds combine with an excess of capital to make 
foreign investments particularly attractive."
-Edward Chancellor
Chapter 4, Fool's Gold: The Emerging Markets of the 1820's