Emerging market equities, bonds and currencies are once again selling off HARD. Please join us for a conference call Tuesday, December 16th, at 1:00pm EST to discuss why this time actually is different.
Since our September 23rd [bearish] note titled, “EMERGING MARKETS: THE EM RELIEF RALLY IS LIKELY OVER”, the MSCI EM Index has declined -7.2%, the JPM EM Currency Index has declined -6% and OAS on the Bloomberg USD EM Composite Index has widened +78bps to 385bps.
While it’s clear to us consensus among the investment community finally understands the negative impact of a stronger U.S. dollar upon emerging market asset prices, we don’t think the associated risks are even in the area code of being priced in at the current juncture. In fact, we anticipate considerable downside from current prices, citing a plethora of risks that aren’t even being considered by the preponderance of investors.
Topics covered will include:
- Where is consensus on emerging markets?: a review of recent literature to help appropriately frame the debate
- Which countries, regions and asset classes are most risky?: using our proprietary EM Crisis Risk Model to quantify and summarize the dispersion of fundamental risks among EM economies (NOTE: we have long ideas too!)
- What are the risks no one is talking about?: quantifying the systemic risk across the EM space and how said risk might spillover into broader systemic risk for global financial markets
- What’s the bull case?: broadening our analytical lens to show why the #StrongDollar tightening cycle has only just begun – despite the fact that we DO NOT think the Fed will hike interest rates
All Hedgeye Macro subscribers will receive the dial-in information and presentation before the call on Tuesday, December 16th.
Associate: Macro Team