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wukan
#5321 Posted : Wednesday, November 07, 2018 2:57:27 PM
Rank: Member


Joined: 11/13/2015
Posts: 867
lochaz-index wrote:
lochaz-index wrote:
No respite for EM/FMs and the weaker AMs for the coming year as the neutral FFR is projected to close at around 3.25%. This represents a 100bps hike from current level. More capital flight(risk off) and a strong USD are a certainty in that environment. If the dollar gains undue momentum from the resultant actions then it won't be pretty.

In general if the hike projection holds, we should be looking at an average 20% shaving for EM/FM stocks in 2019.

With the midterms risk event out of the way, the recent market choppiness should desist as economic health of various economies take center stage again. The ensuing trend should close out the year as losers and gainers take stock.

Short term bounce in EM/FM for now then turns down as the last fed hike for 2018 comes into focus again.


unfortunately the mid terms did not give markets a decisive answer on where America wants to go. Feels like Brexit so you can't tell if they want in or out, dollar weaker or stronger, more trade wars or less. When they enter into a recession maybe the direction will be clear. EM/FM economies which show strength will attract more capital.
lochaz-index
#5322 Posted : Wednesday, November 07, 2018 8:50:18 PM
Rank: Veteran


Joined: 9/18/2014
Posts: 901
wukan wrote:
lochaz-index wrote:
lochaz-index wrote:
No respite for EM/FMs and the weaker AMs for the coming year as the neutral FFR is projected to close at around 3.25%. This represents a 100bps hike from current level. More capital flight(risk off) and a strong USD are a certainty in that environment. If the dollar gains undue momentum from the resultant actions then it won't be pretty.

In general if the hike projection holds, we should be looking at an average 20% shaving for EM/FM stocks in 2019.

With the midterms risk event out of the way, the recent market choppiness should desist as economic health of various economies take center stage again. The ensuing trend should close out the year as losers and gainers take stock.

Short term bounce in EM/FM for now then turns down as the last fed hike for 2018 comes into focus again.


unfortunately the mid terms did not give markets a decisive answer on where America wants to go. Feels like Brexit so you can't tell if they want in or out, dollar weaker or stronger, more trade wars or less. When they enter into a recession maybe the direction will be clear. EM/FM economies which show strength will attract more capital.

Without a definitive or drastic change, I expect the trend prior to the midterms to continue where capital was gravitating to the blue chip AMs and the weaklings get slaughtered. The midterms weren't the biggest risk event so any volatility emanating from such should subside. Short of democrats attempting an impeachment wouldn't worry about the political situation in the US.

On brexit, their PM might be ousted before the formalization of any exit arrangement. Biggest risk would be if Corbyn somehow managed to take over the reigns...that would be a shorting paradise for anything British.

The most interesting political angle is in relation to the EU. Both Merkel and Macron in the Germany-France axis that runs the EU have huge problems with the former losing elections and offering to step down in 2021. The latter is falling in the polls but the kicker is that in both countries an extreme right (eurosceptics) candidate could take over. The implications for the EU and euro would be profound if that happened.
The main purpose of the stock market is to make fools of as many people as possible.
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