Editor's Note: Below is a brief excerpt transcribed from today's edition of The Macro Show hosted by CEO Keith McCullough. Click here to learn more about The Macro Show.
Keith McCullough: Speaking of Emerging Markets. The impact this Emerging Markets slowdown is having on financial markets is not new.
A lot of people can try to blame this on the trade war. But do we have a trade war with Argentina? Do we have a trade war with Brazil? Do we have a trade war with any country in Latin America? It’s not about trade wars.
The economic cycle continues to slow in Argentina, Brazil and Turkey. Emerging Markets slowing reiterated. We’ve been making that call since January and you’ve stayed clear of those exposures.
Just look at what Emerging Market currencies did last week, during a week where the U.S. dollar was basically flat.
- US Dollar Index was flat last week at 95.14 and remains Bullish TREND @Hedgeye
- Argentina’s Peso crashed another -16.4% last week to -49.5% YTD and remains Bearish trend
- Turkey’s Lira collapsed another -8.1% last week to -41.9% YTD and remains Bearish trend
- India’s Rupee moved toward #crash mode down -1.5% last week to -9.8% YTD and remains Bearish trend
(I define a crash in the currency space as a fall of -10% or more.)
So the Dollar was flat on the U.S. Dollar index last week, but the Dollar is bludgeoning Emerging Markets and other Developed Market currencies. Australia’s Dollar got tagged for a -1.9% loss last week to -7.9% year-to-date.
These things continue to emerge because Emerging Markets are on the wrong side of strong dollars.
