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The Emerging Market Heat Map Is Flashing Red; Here's Who's In Trouble

Tyler Durden's picture




 

On Friday, we visually documented the carnage that’s played out in EM currencies since August 11 when China moved to devalue the yuan. Here, in brief, is the backstory: 

Things were already bad enough for emerging markets going into August. Persistently low commodity prices, slumping demand from China, depressed global trade, and a “diminutive” septuagenarian waving around a loaded rate hike pistol in the Eccles Building had served to put an enormous amount of pressure on the world’s emerging economies. And then, the unthinkable happened. No longer able to watch from the sidelines as the export-driven economy continued to buckle from the pain of the dollar peg, China devalued the yuan. What happened next was nothing short of a bloodbath. In short, the devaluation drove a stake through the heart of the EM world by simultaneously i) validating concerns about weak Chinese growth, thus guaranteeing further pressure on commodities, ii) delivering a staggering blow to the export competitiveness of multiple emerging economies, iii) depressing demand from the mainland by making imports more expensive.

While virtually no emerging economy has escaped the pain, some countries have suffered more than others due to their particular sensitivity to trade with China and idiosyncratic political circumstances. One of the hardest hit EMs has been Brazil, and to be sure, we haven’t been shy when it comes to documenting the country’s troubles, which can be summarized as follows: 1) twin deficits on the current and fiscal accounts, 2) political deadlock which makes closing the budget gap with austerity next to impossible, 3) a plunging currency, 4) the worst stagflation in over a decade, 5) a recession that’s projected to last for many quarters to come, 6) street protests, 7) a President with an 8% approval rating, 8) an embattled finance minister, 9) allegations of government corruption. And we could go on. 

Given the above, we weren’t surprised to see Brazil at the top of RBS’ EM heat map which is presented below and should serve as a helpful guide to who’s hurting the most in the wake of China’s “surprise” entry into the global currency wars.

 

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Sun, 09/06/2015 - 10:43 | 6515140 B2u
B2u's picture

History will one day ask the question...."Why did Central Banks ever believe the Keynsian nonsense?"

Sun, 09/06/2015 - 10:48 | 6515149 FireBrander
FireBrander's picture

Because "Keynsian nonsense" was an excellent tool for the acquisition of power and, nearly, unlimited self enrichment.

What pyscopath could resist such a tool; nonsense or not...

Sun, 09/06/2015 - 10:50 | 6515169 LetThemEatRand
LetThemEatRand's picture

If the devil's greatest trick was convincing the world he doesn't exist, then central bankers' greatest trick was convincing the world they have some function or purpose other than self-enrichment.

Sun, 09/06/2015 - 13:50 | 6515733 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Keynesian thought works on the concept that stuffing the economy with cheap paper money it will boost the economic prospects in the short term at little to no cost. Of course it is an easy sell. In the long term, it leads to ruin. Corrupt leaders always take the easy way out when available.

Sun, 09/06/2015 - 14:47 | 6515901 GreatUncle
GreatUncle's picture

A far better central banker trick was to make people beleieve they were sheep, negates the self-enrichment because sheep do not understand the concept.

Sun, 09/06/2015 - 11:03 | 6515211 FireBrander
FireBrander's picture

I asked this before, let's "Fill in the blank" again...

 

"We had to suspend the ____, in order to save it"

 

Bush said "Free Market".

 

I say "Corporate Capitalism"...what do you say?

 

PS. If you answer "Socialism", then you're a Rightwingnutjob. The only TRUE and PURE Socialism in the USA is the VA Medical System..but no calls for a repeal/shutdown?

 

Sun, 09/06/2015 - 11:21 | 6515266 erkme73
erkme73's picture

I must be a "no one" becuase I most certianly would love to shut down the VA medical system.   Why on earth do we need parallel medical infrastructure?   Is there ANYTHING government does efficiently, and without corruption?  The ONLY reason the VA medical system exists is so that when vets seek medical attention for things like Agent Orange, Fukashima radiation sickness, or chemical weapon exposure, the rest of us civilians never hear about it.  Easier to cover up.  

Sun, 09/06/2015 - 11:54 | 6515359 FireBrander
FireBrander's picture

""Those that have received care here in Des Moines at the VA center or the VA hospital here have said that they do receive good care...However it's getting into the system — the wait periods," Ernst said. "We have to do something about that. The care here has been good.".."Ernst would like veterans to be able to use a card or a voucher at a community medical facility, but she'd keep open the federal system of veterans hospitals"

Joni Ernst - July 28, 2014

Uber Rightwingnutjob Joni Ernst says that SOCIALIZED MEDICINE "PROVIDES GOOD CARE"...and to add a little icing, she thinks it just needs more money in order to shorten access times!

Don't our soldiers deserve better than SOCIALIZED MEDICINE?

The Republican party sure doesn't think so...

 

Sun, 09/06/2015 - 12:08 | 6515423 83_vf_1100_c
83_vf_1100_c's picture

  I fall under the VA system. Sucks bad. All the pills you want, yes, actual timely care? ROFLMAO. Lots of us vets dying off becuse it take weeks/months to get in to a specialist. This is actually a fiscally sound plan as these vets are drawing retirement checks and if they die early then those funds as well as the future medical costs are saved. The family gets Tricare which is a pretty good deal if you can find Docs that participate.

Sun, 09/06/2015 - 12:11 | 6515435 Freddie
Freddie's picture

The VA's budget has grown exponentially in the past 10 years or so.  Something like $10 billion to close to $100 billion. 

Sun, 09/06/2015 - 13:08 | 6515614 Clinteastwood
Clinteastwood's picture

83,

I don't think you've checked lately on how long it takes to get in to a specialist, even if you have private insurance. Docs are leaving in droves because of continued government meddling in their practice of medicine. The government, and all its bean counters, will NEVER be up to practicing medicine.

Sun, 09/06/2015 - 13:55 | 6515720 FireBrander
FireBrander's picture

"Doctors are leaving..." because they are old, rich, and tired.

New doctors are not coming in fast enough because THE AMA PURPOSELY LIMITS SUPPLY in order to KEEP WAGES ARTIFICIALLY HIGH.

Better than 50% of what occurs, daily, in our clinics and hospitals does not require a full Medical College degree.

Take stitches for example...do you really need a medical degree to sew up a cut?

There are many, day in, day out, medical needs that could be taught in a matter of months rather than years.

Sun, 09/06/2015 - 15:32 | 6516022 Chad_the_short_...
Chad_the_short_seller's picture

I go to the VA and I have better doctors now at the VA than I've ever had in any civilian doctor in my entire life. The doctors at the VA take their time, care about you and aren't in a rush to get you out and off to the next dollar bill patient like every civilian doctor. Oh yea, and my medical is 100% free for the rest of my life since I served in combat. I love the VA, it's awesome. 

Mon, 09/07/2015 - 03:29 | 6517677 August
August's picture

Any Murcan who volunteers to go to another country, which never attacked the US, and kill its un-cooperative residents, deserves whatever he gets.

Sun, 09/06/2015 - 17:07 | 6516232 Greenie
Sun, 09/06/2015 - 10:53 | 6515179 order66
order66's picture

Greed + Power grab + not knowing wtf to do = co-ordinated centrally planned economies worldwide.

Sun, 09/06/2015 - 11:44 | 6515321 KnuckleDragger-X
KnuckleDragger-X's picture

And bragging about it while you do it.......

Sun, 09/06/2015 - 10:47 | 6515156 messymerry
messymerry's picture

If man cannot rule himself, man surely cannot manage a global financial system.  How stupid are we to let this continue?

;-D 

 

Sun, 09/06/2015 - 10:51 | 6515175 BullyBearish
BullyBearish's picture

Pretty F^*^ing stupid...

Sun, 09/06/2015 - 10:54 | 6515184 theFNG
theFNG's picture

Vietnamese Dong on the rise!!!

Sun, 09/06/2015 - 11:07 | 6515223 Never One Roach
Never One Roach's picture

Yeah, but the Dong faces stiff competition.

Sun, 09/06/2015 - 11:20 | 6515265 messymerry
messymerry's picture

Sorry, I can't help it:  I'm long the Dong,

;-D

 

Sun, 09/06/2015 - 12:41 | 6515532 bamawatson
bamawatson's picture

...can't beat it 

Mon, 09/07/2015 - 05:19 | 6517728 Johnny Moscow
Johnny Moscow's picture

you certainly don't want to be short Dong right now

Sun, 09/06/2015 - 10:56 | 6515189 Deacon Frost
Deacon Frost's picture

According to the chart, S Korea improving?

And exports are down ~15%.

Sun, 09/06/2015 - 10:57 | 6515193 FireBrander
FireBrander's picture

It's just a tad unfair to sully Keynes name with this debacle/theft/calamity...

His basic idea was to DAMPEN the EXTREMES of the economic cycle…NOT TO ELIMINATE the DOWN aspect of the economic cycle.

In short, the government should “SAVE” money during the “good times” and spend that SAVED MONEY during the bad times in order to help “smooth” out the economic waves….ending the extreem boom and bust cycle that wreaks havoc on societies and often leads to wars.

What we have now, and have had for decades, is the government spending money 24/7/365 in a futile attempt to eliminate any economic cycle contractions…that is not what Keynes proposed.

Sun, 09/06/2015 - 11:32 | 6515291 Monetas
Monetas's picture

So, Keynes wouldn't flush the toilet twice .... if the turd (mal investment) .... didn't go down .... you have to let the cycle run it's course .... to flush out the obstinant mal investors .... then, not interfere with the recovery .... like the forest fire cycle .... it's necessary .... so, might as well harvest some good timber .... before it burns ?

Sun, 09/06/2015 - 11:32 | 6515295 OpTwoMistic
OpTwoMistic's picture

Cannot confuse the government with the FED.  The Fed owns the government.  There is no saving money, only debt.

Sun, 09/06/2015 - 11:38 | 6515308 Ckierst1
Ckierst1's picture

It still constitutes intervention into what should be free, laissez faire, unsullied markets by morons, power brokers and oligarchic profiteers.  Separate state and markets as you would state and religion. There exists a violation of the domain of natural law and natural law's Creator!

Sun, 09/06/2015 - 11:57 | 6515371 FireBrander
FireBrander's picture

On paper, in a perfect world, keynes idea would work great...but it's not a perfect world.

Really, no single theory will deliver nirvana, we need a "muddle through" system...one where corruptives forces offset each other.

Sun, 09/06/2015 - 10:59 | 6515201 Peribanu
Peribanu's picture

LOL, the chart is in alphabetical order by continent, so it's hardly surprising to see Brazil at the top...

Sun, 09/06/2015 - 11:00 | 6515207 clade7
clade7's picture

History will one day reference the cause of global catastrophe.... tiny charts that are unreadable...

Sun, 09/06/2015 - 11:02 | 6515212 RawPawg
RawPawg's picture

going for broke

live just enough for another day

China tonight

Sun, 09/06/2015 - 11:06 | 6515217 Never One Roach
Never One Roach's picture

<< 9) allegations of government corruption.>>

 

If you want to live like a King, become a gubmint official in almost any country -- untouched by austerity and above the law and welcomed by all Swiss bankers who will give you the Red Carpet treatment.

Sun, 09/06/2015 - 13:11 | 6515632 Hongcha
Hongcha's picture

Except we know where they live.  And they gotta sleep sometime.

Sun, 09/06/2015 - 11:10 | 6515232 roadhazard
roadhazard's picture

So they will be what they have always been. In the end that will be better off than what the people in the established markets are going to have to endure.

Sun, 09/06/2015 - 11:11 | 6515236 Ms No
Ms No's picture

If this UBS chart is more than a few weeks old it is already obsolete as fast as things are moving, it's hard to imagine that anyone's economy could be improving.  We should probably go ahead and make a sliding scale measure of economic health based on the fucked method...

soon to be fucked--moderately fucked--waves of refugees fucked--extremely fucked--cash machines empty fucked--bank holiday fucked--grocery stores empty fucked--people selling their kidneys & children fucked--currency collapse fucked--war everywhere fucked--grapes of wrath fucked--what was that bright flash fucked. 

 

Sun, 09/06/2015 - 11:21 | 6515267 Tinky
Tinky's picture

I've been thinking more broadly along the same lines. It seems a virtually certainty that every one of the major shocks to the system (e.g. oil price decline; China unpegging/devaluing, stock markets crashing, etc.) is causing tremendous secondary and tertiary (etc.) problems behind the scenes (e.g. derivatives, etc.). So, not only is the collapse unfolding in earnest right now, but the amplitude and frequency of the major shocks and aftershocks are undoubtedly increasing, meaning that further acceleration is assured.

Those who have recently argued that the balls can and may remain in the air for years are soon to discover just how far wrong they have been.

Sun, 09/06/2015 - 12:02 | 6515392 Winston Churchill
Winston Churchill's picture

Something has been dead for a while, behind the curtain.

Aunty Yellen's vagisil spray is no longer covering the stench.

Sun, 09/06/2015 - 12:03 | 6515395 general ambivalent
general ambivalent's picture

Yeah, if they're already having a hard time pricing that will become much harder down the road. And that is simply one thing amidst a series of fragilities, one black swan among many.

Sun, 09/06/2015 - 11:12 | 6515237 knuppel
knuppel's picture

Why isn't shithole USA flashing purple? #brokenation

Sun, 09/06/2015 - 11:37 | 6515305 Monetas
Monetas's picture

The sucky socialist/Islamic states are declining .... emerging Capitalist states are IMPROVING ! Booyah !

Sun, 09/06/2015 - 11:53 | 6515330 Slowdrip
Slowdrip's picture

When do the plate spinners finally throw their hands up, and crawl off the stage?

Sun, 09/06/2015 - 11:47 | 6515338 Atomizer
Atomizer's picture

The primary Federal Reserve dealer casino heads cannot figure out how to extend hospitality reward points to lure new sucker's. 

Just like the fucking Hilton timeshare bullshit on 2200 N.Ocean Blvd Myrtle Beach SC. Just down the street from us. 

The new cashless society is built on a rewards program. 

Sun, 09/06/2015 - 11:52 | 6515356 DaNuts
DaNuts's picture

Negligable growth for Russia but the people still love their psyco president. 

Sun, 09/06/2015 - 12:09 | 6515424 Stormtrooper
Stormtrooper's picture

Negligble growth for US but the people stii live their illegal alien, er, President.

Sun, 09/06/2015 - 11:55 | 6515366 williambanzai7
williambanzai7's picture

Tools for fools

Sun, 09/06/2015 - 14:10 | 6515664 MSimon
MSimon's picture

We had all these problems when banks issued their own currencies. What is diffrerent is that improvident banks no longer fail.

Sun, 09/06/2015 - 16:49 | 6516176 Youri Carma
Youri Carma's picture

HEADLINES AUGUST 2015 - WORLD ECONOMY COLLAPSING!!!

In Order Of  RBS (Top) List: http://www.zerohedge.com/sites/default/files/images/user92183/imageroot/...

BRAZIL
Unemployment Soars In Latin America's Most Important Economy, Brazil
Moody's downgrades Brazil's rating to Baa3 from Baa2; outlook changed to stable
Economists cut Brazil's outlook for 2015, 2016
Brazil July Industrial Production Decline Worse Than Expected
Brazil Economy Contracts Most In 6 Years To Enter Recession In Q2
Brazil Economy Shrinks More Than Forecast in Worst Recession in 6 Years
Brazil Consumer Confidence Weakens Further
Brazil Retail Sales Fall For Fifth Month
Petrobras profit hit by oil prices, tax settlement

SAUDI ARABIA
Fitch Lowers Saudi Arabia's Rating Outlook
Arabtec Posts Third Consecutive Quarterly Loss as Costs Rise

CZECH REP.
Czech Jobless Rate Rises In July
Czech Aug Manufacturing Growth Eases More Than Expected
Czech Economic Sentiment Falls For Second Month
Slovenia Q2 Economic Growth Eases
Slovenia Industrial Output Falls In June

HUNGARY
Hungary Q2 Economic Growth Eases More Than Expected
Hungary Industrial Production Growth Eases In June

ROMANIA
Romania Economic Growth Eases Unexpectedly In Q2

RUSSIA
Russia cuts 2015 outlook
Russian GDP Plunges 4.6%
Russia manufacturing sector contracts further
Russia Manufacturing Contraction Continues In August
Russia's Lukoil posts profit drop of 58% on year
Russia Sales Outlook Worst in BRIC Markets on Oil, Recession

POLAND
Poland's GDP growth unexpectedly slows in 2Q
Poland's Industrial Output Falls More Than Forecast
Poland Manufacturing Growth Eases Sharply In August
Poland's manufacturing PMI falls sharply in August

TURKEY
Turkey Manufacturing Sector Contracts Unexpectedly In August
Turkey's August PMI signals slump, reverses growth
Turkey Consumer Confidence Unexpectedly Falls In August
Egypt Non-Oil Private Sector Contracts In July

CHINA
Goldman Cuts China 2016 Growth Forecast to 6.4% from 6.7%
Moody's revised downwards China GDP growth forecast for 2016 to 6.3%, from 6.5%
IMF Extends SDR Valuation; Prolongs China's Wait For Yuan Inclusion
Chinese Economy Crashes To 2-Year Low; China Stocks Plunge
China Stunner: Real GDP Is Now A Negative -1.1%, Evercore ISI Calculates
BLACK MONDAY - Shanghai Composite Goes Red For The Year, Wiping Out 60% In Gains
China's 'Black Monday' takes its toll
Chinese Stocks Keep Tumbling, Tumbling and Tumbling ...
China Gets Creative, Turns To Swaps To Manage Yuan
China's Drastic Steps Prop Up Stocks
Demand For Credit Plunges 55% In China As Slump Deepens
China manufacturing contracts, euro zone and U.S. slows
China Caixin factory, service PMIs suggest economic slowdown worsening
China August services activity falls to lowest level in over a year
Weak China Aug factory, services point to further economic slowdown
China's Manufacturing Shrinks Most Since 2009; Services Growth Weakens
China Manufacturing PMI Slips To Six-Year Low - Caixin
China Manufacturing Sector Contracts In August
China banks warn of rising bad loans and falling margins as economy slows
China Industrial Profits Fall In July
China August official factory PMI seen shrinking to three-year low
Sharp China factory slowdown in August raises global growth fears
China smartphone sales fall for first time
Panasonic to shut battery factory in Beijing, cut 1,300 jobs
China Manufacturing Sector Contraction Continues - Caixin
China Reserves Seen Dropping $40 Billion a Month on Yuan Support
The Downturn In China Is 'Our' Downturn
China industrial production growth slows in July
China Industrial Output, Retail Sales Growth Weakens
China's July exports slump 8.3%
China July vehicle sales fall biggest in 2-1/2 years
China Exports Decline Sharply In July
China’s Exports Declined More Than Expected In July
Chinese Demand May Worsen as BMW to Toyota Issue Warnings
China Producer Prices Fall to Lowest in 6 Years Amid Weak Demand
China's Slumping Car Sales Push Bitauto to Eighth Weekly Decline
China Caixin manufacturing PMI falls to 2-year low
Chinese manufacturing activity slips in July
Asian markets fall as Chinese factory data show slowdown
Chinese factories face headwinds in July
China Manufacturing Sector Remains In Contraction
China Industrial Profit Growth Slows In June
Biggest contract iPhone maker Hon Hai earnings growth slows

THAILAND
Thailand Cuts Growth Forecast As Growth Slows In Q2
Thailand GDP Growth Eases In Q2
Thailand's Overall Economic Activity Remains Weak
Thailand’s Economic Growth Slows, With Yuan Denting Outlook
Thailand Manufacturing Production Dips In June
Thailand Exports Fall More Than Expected In June
Thai Airways to cut 1,401 jobs, suspend flights to U.S.

VIETNAM
Vietnam Manufacturing Sector Slows In August

INDONESIA
Indonesia Manfacturing Sector Contracts Further In August
Indonesia Exports Plunged 19.2% and Imports 28.4% in July

INDIA
Moody's cuts India's growth forecast to 7%
Indonesia's Economy Has Stopped Emerging
India Manufacturing Growth Slows In August
India Growth Slows More Than Expected In June Quarter
Slower India Growth Adds Pressure On Government, Central Bank
RBI Chief Rajan Urges Vigilance On Fragilities In Global Economy
India Exports Declined For The Eighth Straight Month In July

SOUTH KOREA
Korea Leading Index Slips 0.2% In June
South Korea Manufacturing Sector Contracts In August
South Korea Industrial Output Eases 0.5% In July
Samsung Slumps to 10-Month Low on Disappointment With Phones

MORE: http://forum.prisonplanet.com/index.php?topic=100571.msg1549238#msg1549238

Batten the hatches, stormbringer coming! No point in running because it’s coming your waaaiaaaaaaay! https://www.youtube.com/watch?v=4C2K889u_90

Mon, 09/07/2015 - 05:23 | 6517729 Johnny Moscow
Johnny Moscow's picture

^^ getting ugly out there, just wondering how much longer China can keep up the facade. I'd guess they have pleny of interest rate cuts coming up, but that can only stem the tide so long.

Meanwhile, decling Europe supports US policies that come directly back to bite them in the way of "migrants." Big seller of Europe given their horrible mismanagement of Greece and now this "refugee" crisis. They can't manage a lemonade stand from what I've seen.

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