[VIDEO] - EM Equities: different this time...
2024 consensus-season is nearing, here's something to consider...
[VIDEO] - EM Equities: different this time...
In this video we look at some of the significant macro shifts that have taken place recently — making for a decidedly different outlook for EM equities. This should be of interest given how consensus it was to be bullish EM at the start of this year, and most likely what will end up being a consensus call again at the start of next year…
(click here to watch the video in case it does not load below)
NOTE: this video uses slides/charts from a recent edition of the Weekly Macro Themes report — which is a key part of our institutional service, and which forms part of the analysis and conclusions that goes on behind the scenes for our Entry-Level Service here on Substack.
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VIDEO TRANSCRIPT
For accessibility and convenience, here’s the transcript from the video above:
This time it's different for EM - here’s why…
the chart on the right says a lot
-it shows cross-asset breadth for EM assets (stocks/bonds/FX) making a sharp move higher from washed-out levels
this move basically marks the point where the market made up its mind that the Fed is done with rate hikes and the USD has peaked
but importantly it also comes from yet another reset in sentiment to extreme pessimism -- which in this case we can look at as a contrarian bullish signal, especially given the macro catalysts
but what is also key on the monetary front is how EM central banks are pivoting from rate hikes to cuts
this makes sense, they were first to hike and hiked more aggressively, now they are done and moving to ease policy -- this will be a key tailwind to EM assets (both stocks and bonds)
meanwhile this is all set against a backdrop of cheap valuations for EM equities
so while bullish EM was consensus at the start of this year, and likely will also be at the start of next year, it would be wrong to ignore the upside and indeed what is different this time (on the macro front)
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