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The Reason Behind The Latest Emerging Market Freakout, In Two Charts
Confused by the most recent collapse in Emerging Markets, which if it hasn't approached the tumble experienced in the first Taper Tantrum, will do so soon enough? Don't be. The following two charts should put everything in perspective and yes, it has nothing to do with the soaring US Dollar (because said surge will end soon enough once everyone grasps that Fed QE is coming right back) and everything to do with the slowdown in Chinese credit creation.
First, a quick thought from Goldman:
A major headwind to EM GDP growth has been the slowing of China’s economic growth. During the early 2000s, China was a primary driver of broad EM growth, posting real GDP growth above 14% in 2007. China has become increasingly important, as evidenced by the rising correlation between China’s growth and "EM ex-China" growth, which has been steadily increasing since the early 1990s. Given the widely accepted view that China’s GDP growth is set to slow in coming years investors are searching for a new source to accelerate EM growth vs. DMs.
In other words: EM growth is first and foremost about what that epic, until recently at least, creator of $25 trillion in credit inside money is doing (or not doing as the case right now is).
So what is China doing? As per the Goldman wavefront basket showing the real time change in various economic growth indicators, something very quick and sudden:
Oops.
Bottom line: either China restarts its $1 trillion/quarter credit creation dynamo, which it can't as it is already full to the brim with NPLs and has long-crossed the point of Ponzi Finance in the Minsky diagram, or the EMs get it.... followed promptly thereafter by the DMs. After which we give the Fed 4-6 weeks before it returns to doing the only thing it does well: print.
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could be time to invest in brazil
Dennis Gartman: Stay far, far away from Brazil - CNBC
http://www.cnbc.com/id/102064297?trknav=homestack:topnews:18
QE isn't coming back you mooks!
Cause it's ineffective and wrecks the bond market.
That plus the Feral Reserve must save its own ass now from a collapsing dollar.
DUUUHHH!!
1,000,000,000 +'s for "Feral Reserve"
Well, it IS an official agency of the US Feral Government.
so how are they going to save their own ass when they already have interest rates at zero
Next year it will the old guard is leaving. The yutes dont fear inflation. So this is just tree shaking all the way down to 1700 or so.
QE could come back. It isn't about currency, it is about protecting bank (ie: Fed shareholder) balance sheets.
Trapped between a rock and a hard place.
You are probably right, but neither outcome would surprise me.
The question is which outcome is more destructive? I think you hit it on the nose. A dollar collapse could be tremendously destructive, but in the face of having no alternative (definitely bust, or possibly bust), it might be considered as an option.
It boosts the stock market which gets people re-elected.
Peru is feeling the heat from a China slowdown. I am not surprised that King Dollar currently reigns.
Thanks for the field report. I'm picking up news on the China slowdown from my customers as well, could make for an interesting Q4 (and Q3 earnings season if folks disclose that things aren't looking good in forward guidance.)
"because said surge will end soon enough once everyone grasps that Fed QE is coming right back"
not any time soon
QE ending because of liquidity problems ... maybe when recession hits and we say hello to $trillion deficits again
So you mean next year then. Which is actually only about 3 months away.
Maybe they'll just change collateral reqs so any ole junk bond will do. Either that or start up a war so we can blow the deficit back out.
"So what is China doing?"
"hello, this is a stewardess ... is there a pilot on board?"
Purging the system.The economic one., is my guess.
Better to do now, than let the US do it at their convenience.
Just further preps for WWIII.
Bye bye Fucko
meanwhile...they just bought the Waldorf Asotria in NYC for 1.9 billion
Just because the economy is slowing in China...that does not mean the corruption is slowing down....its better to get your theft or graft money out of the country..just like Russia...or you run the risk of the Government stealing it back from you...
QUESTION PLEASE.
I have been looking at FAX, which is the Aberdeen Asia Income Fund, yielding about 7%.
I believe one does not wish to invest in anything where the currencies are declining. At least I think thats the way it used to be (obviously not in the case of JAPAN............for now)
Does that relate to bonds as well? I am looking to avoid US bonds as I fear the Fed may raise not because of growth, but because they will want to lower later.
Thanks.
PS: Now that I think about it some more, if China pumps/lowers/whatever - that should be good for Asian bonds?
Gold, Silver, cash, arable land with water rights.
U.S. Treasuries will be the last bonds on Earth to default, because once that happens = global reset/jubilee.
There is only one gold play thats pays a dividend.
Gabelli Gold and Natural Resources. 1/2 miner 1/2 gold, and they write covered calls.
11% div yld. Been watching it, and will buy when the dollar turns.
cue the helicopters.....
"Dr. Yellen, paging Dr. Yellen..."
Just imagine the derivatives unwind.
Not enough binary fiat in the world to contain that coiled spring.
Marriage vs. Feudalism (Civil Marriage)
Not to worry; Putin will not escape the gravity of Family Law in Russia, with Chinese toilet paper, any more than America has, with Kissinger & Kids.
It’s always a small and shrinking world in the empire, because its behavior, cutting off the top and attempting to force it in back of the FILO bankruptcy queue, with an ever-growing line of gatekeepers, growing ever-more arbitrary decisions, paid in an entitlement ponzi of debt against your children’s future, fails every time, whether it employs gold, paper, bits, or tulips, that which is neither rare nor necessary.
The irrational market for humanism, adrift of any mooring but itself, can only abstract itself into self-relativity.
In this latest episode, they have merely employed MAD programming as the ultimate scapegoat, and with trillions of lines of code as a sunk cost, begetting ever more code, they are lost again, in the recursion of creating emergencies as demand and responding to emergencies as supply, making everyone in the empire a firefighter, fighting their own fires.
Artificial intelligence placed in the media lobotomized head of Fred Flintstone only treads water so long. Cognitive Science is an oxymoron, as anyone who was there at inception can tell you, but no great analysis is required.
Professors give the entitled preference, to arbitrary answers to arbitrary tests, just like in grade school in the city. If you want an A, position yourself in the herd accordingly. If you want to learn something, go where the herd does not. The answer to economic mobility is not residing in the penthouse.
A minority of parents accept the responsibility of forwarding past investments. The majority liquidates in their own favor, employing their own children, the children of others and the children of those 5000 miles away, and their foundation crumbles every time. The petrodollar is just the latest financial shoring to hide the decay.
History tells you not to spend more than 10% of your time bathing in poison, to activate your immune system. The vast majority of that poison enters your mouth, from the mouth of another. Most of what you consume is acid. Keep your mouth clean, by bathing it with baking soda diluted in water. Use olive oil when you cook. And it doesn’t hurt to drink coconut milk. Your teeth are living derivatives. Language is no different.
Practice position, discernment and perspective.
Feudalism, in all its forms, is simply a counterweight to marriage. Marriage lives in many dimensions. All feudalists attempt to narrow marriage to one dimension, their own, destroying generational and sexual trust, replacing them with an ever-growing laundry list of those to be added to the already long list of civil marriage. Jesus didn’t have anything nice to say about feminism, rampant at the time, or any of the other isms making up humanism.
Government is immoral by definition; it can only see the moment it lives in. Trusting it to do stupid is one thing; trusting it with your family is another. The ‘elites,’ on the bottom rung of the evolutionary ladder, don’t have the brain cells to hunt you down, and the critters they employ are only one rung up, headed toward the DNA churn pool, studying it. The advantage of University is not what they want to teach you, but seeing the empire personality event horizons in action, agendaism.
There are two possibilities with metal fillings. They are going to crack your teeth, creating a chain reaction as your teeth shrink, or they are going to be pushed out, as your teeth grow to remove them. If you let things go too far, as parents often do for the sake of their children, you are better off getting dentures, rather than letting the dentist hack you and your children up, one tooth at a time, only to end with bad dentures.
You don’t learn at University any more than you learn anything about someone on a date. You learn by finding passion, in yourself and another. The empire has been trying and failing to bottle marriage for 5000 years, and it’s still a waste of time.
At any time, any moment, we could be free from our masters forever. First, we must cease our love for those who are destroying us. We must admit to ourselves that we are not free. We must understand that we as a people have had a severe case of Stockholm Syndrome for generations. We must admit that Washington has become worse than ever with our help. We must treasure our children’s lives more than some ‘family tradition’ of serving in the military. We must treasure our legacy assets enough to remove them from large, insolvent banking institutions. We must take responsibility for ourselves by putting our long term savings into gold and silver again, and other tangible properties worth owning (like our people’s land!). We must see the world anew. We Southern Folk have consented to our own servitude with a vengeance, and we must first blame ourselves.
When we admit this, and we each vow to ‘personally secede’ ….and resolve that we ourselves, our families, and our communities will never trust in their rigged games again, we weaken them. Once a man ‘awakens’ to this truth, he can never go back to sleep again.
Let us resolve to look in the mirror, repent of our own consent to servitude first, and then rededicate ourselves to being free. Slaves ask for permission to do something. A free man asserts his rights. Let’s reassert them in every imaginable way, answering to no one but God and ourselves, and let’s do that today
+1 amen
You could try ditching the servitude to God and experience life as a truly free and independent entity (as far as one can in a society of 7 billion people). Humans are genetically programmed for subservience and the concept of God is the overarching shadow of that programming.
The way TPTB are handling the 'ebola containment issue' I doubt this will matter in a few weeks either way.
The pressure release valves are seizing
Somethings gonna blow and soon
Hey Kevinearck
Save your bullshit marriage/dating dribble for a counseling site or Oprah.
Idiot
Wavefront is almost as engaging and informative as Swirl-O-Gram.
Is it possible that when the market starts to have a whiff of tanking that the Fed trots out some presidents to calm fears that this action has become a leading indicator for a real problem? Last go around, this used to work but now investors might be viewing it both as a data point for weakness and likely ineffective this time.
Told you. Dad's saying was right. Yellen is going to shit in her hat and pull it over her ears. She is a ChairTotFED that grazes on Bernanke Satanism.
Ah, another reminder from GS "if only everyone stimulated more"