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Strategies & Market Trends : The Financial Collapse of 2001 Unwinding -- Ignore unavailable to you. Want to Upgrade?

To: robert b furman who wrote (771)	4/4/2018 9:02:44 AM
From: elmatador	Read Replies (2) \| Respond to of 13775

I was shocked yesterday by this graphic

To: robert b furman who wrote (771)	5/9/2018 12:15:00 AM
From: elmatador	Respond to of 13775

Ignore the Emerging-Market Selloff; This Time (Really) Is Different By Paul Wallace Netty Idayu Ismail and Lilian Karunungan May 7, 2018, 7:07 PM GMT+3 Updated on May 8, 2018, 12:29 PM GMT+3 AllianceBernstein says governments have stronger buffers now Many EM nations have reduced their current-account deficits Powell Discusses Fed Dots and Emerging-Market Economies Federal Reserve Chairman Jerome Powell speaks about the U.S. interest-rate path and its impact on emerging markets. This emerging-market rout may not have much further to go. Investors from AllianceBernstein LP to Morgan Stanley and UBS Wealth Management say that while the pain developing-nation assets are experiencing isn’t entirely over, the selloff won’t be anywhere near the magnitude seen during the taper tantrum of May 2013. Back then, emerging-market currencies and bonds slumped for about six weeks as the dollar and U.S. rates rose in response to the Federal Reserve unexpectedly suggesting it would reduce debt purchases. The trigger this time was once again a strengthening greenback and higher U.S. yields. Investors have pulled more than $5.5 billion from bond markets since mid-April, according to the Institute of International Finance. But emerging-market governments now have stronger buffers, which bodes better for their assets, according to AllianceBernstein, which manages about $550 billion of investments. “The biggest issue is that current-account balances are in much better shape than they were in 2013,” said Christian Diclementi, an AllianceBernstein money manager in New York. “Generally, emerging markets are much better positioned today to withstand external shocks. We view it as an opportunity to add exposure to countries that are being overly penalized by a movement in the dollar and U.S. rates.” Nations from Brazil to India to South Africa have reduced their current-accounts deficits in the past five years, while Thailand has turned its shortfall into a surplus of more than 10 percent of gross domestic product. That helps reduce their reliance on foreign investment to plug the gap. Moreover, stable inflation rates and robust growth continue to make their assets attractive, especially for funds looking to diversify from developed markets still offering yields close to historical lows. Policy makers are also reacting better than in the past, according to Diclementi. Argentina’s move last week to defend the peso by hiking its key interest rate to 40 percent and committing to reducing its fiscal deficit exemplifies that. “It showed a cohesion and an understanding of what was needed to arrest the negative sentiments that had built up,” Diclementi said. “Policy making in emerging markets is of a higher quality today than four or five years ago.” There are notable exceptions, Turkey being an obvious one. Investors are put off by its 11 percent inflation, by President Recep Tayyip Erdogan’s coercion of the central bank not to raise interest rates, and by fears that his decision to call a snap election for next month is a power grab. “We continue to be quite cautious on Turkey,” said Jean-Charles Sambor, the deputy head of emerging-market fixed income in London at BNP Paribas Asset Management. But developing currencies as a whole are “massively undervalued” for buyers who have a one- or two-year horizon, he said. “There could be some volatility in the next couple of weeks. Overall, we see that as a buying opportunity.” So does Morgan Stanley. Its analysts said on Monday that emerging-market bonds and currencies will perform better in the coming weeks and recommended that clients short the euro against the South African rand and Philippine peso. Not everyone is convinced. Boston-based Eaton Vance Corp., which manages $434 billion, has cut exposure to developing nations because it foresees more volatility, Eric Stein, co-director of global income, said in an interview. Still, for those that feel the dollar’s climb is unsustainable given a growing fiscal deficit in the U.S., emerging markets look appealing. “We don’t think this is a 2013 type of scenario,” Alejo Czerwonko, a strategist at UBS Wealth Management in New York, said in an interview with Bloomberg Television on Monday. “We’re thinking of indicators such as current-account positions, much improved from 2013 levels, or real interest rates, a lot higher than they used to be, or foreign-exchange coverage ratios. All these factors taken together are a lot better than in the 2013 taper tantrum.”

To: robert b furman who wrote (771)	6/7/2018 1:01:10 AM
From: elmatador	Respond to of 13775

Positive sign: China is Signaling the resumption of a program for mainland investors to buy offshore assets with the yuan that’s been on ice since 2015. As you know China panicked following a run on its FOREX reserves that dropped How China Lost $1trillion nytimes.com Followed by China's tough capital controls put the brakes on outbond deals scmp.com The Chinese must have realized that the only way for them to keep going growing is to allow money to flow out to markets where the returns are adequate instead of misallocating capital at home. Which means China will accept a managed lowering of its foreign reserves Transition and capital misallocation: the Chinese case This paper demonstrates that the allocation of household savings to State-Owned Enterprises (SOEs) in China, and not to the increasing share of private firms, explains both the patterns of capital flows (FDI entries and the accumulation of foreign assets) and the drop in the consumption share during China's transition. The contribution is to explain these two elements in a dynamic general equilibrium model with TFP growth that differentiates FDI and foreign assets. In addition to other frictions, financial intermediation and SOEs have the crucial role by misdirecting household savings. It modifies firms' labor and capital intensiveness, and creates shifts in savings accumulation and capital flows. Moreover, the increasing share of credit-constrained private firms hinders wage growth, and returns on household savings are low to finance SOEs; these two elements reduce the consumption share. With a calibration adapted to the Chinese economy and deterministic shocks, the model also matches to a large extent the data for a variety of stylized facts over the last 30 years. https://halshs.archives-ouvertes.fr/halshs-01176919/document