• Badge

    Hedgeye’s 10 Year Anniversary Super Sale

    25% OFF Risk Ranges

    Amazing Savings On A Yearly Subscription

Below, we have attached a 10 year cycle chart that overlays the Philippine stock market with their equivalent of a Fed funds rate. Sometimes one picture like this makes everything crystal clear. This is the Asian easy money policy picture that created today’s runaway Asian inflation.

Look at how Philippine stocks act when access to capital is cheap and flowing versus when it's tightening. That last melt up in stocks coincides directly with the last round of easy money overnight rate cuts.

This morning the central bank raised rates another 25 basis points in order to "tame inflation". Remember, inflation can be imported to a country whose currency is crashing. Inflation in the Philippines was recently reported at +13% y/y.

The titanic is turning here. If you have to be invested, wade into those waters of "emerging Asia" equities with extreme caution.
KM