“Emerging market countries might be facing an economic crisis.
“16 emerging market countries borrowed $3.4 trillion from foreign lenders, but their foreign exchange reserves amounted to $1.3 trillion.
“The currencies of Argentina, Ukraine, Egypt, Turkey, and Brazil have depreciated against dollar by 80.3%, 69.0%, 60.9%, 60.5%, and 42.5%, respectively, over 5-year period…
“Emerging market countries would be facing high currency, liquidity, inflation, interest rate, default, and emerging market risks due to the shortage of foreign exchange reserves, strong dollar trend, and trade war.”
https://seekingalpha.com/article/4189448-emerging-markets-crisis-alert
“Veteran fixed-income investor Abdul Kadir Hussain sees unsettling similarities between the 1997 Asian crisis and the present that spell trouble for emerging markets. Default rates on emerging-market debt will climb next year as the ending of a decade of easy money by central banks hits weaker companies the most, said Hussain, the head of fixed income at Arqaam Capital, a Dubai-based investment bank.”
“Tunisian Prime Minister Youssef Chahed said on Tuesday a change of government would put the economy at risk and shake the confidence of international lenders, rejecting the president’s call for him to stand down amid an economic crisis.”
“Argentina’s economy shrank 5.8 percent in May versus the same month last year, government statistics agency Indec said on Tuesday, the second straight month of declines in a sign of looming recession and a possible GDP contraction in 2018.”
“Unlike in 1920s Germany, people in today’s Venezuela are not carrying wheelbarrows of cash to buy groceries. Instead, they have turned to electronic transactions. But 40% of Venezuelans do not have bank accounts, while others are unwilling to use credit cards or bitcoins to pay for for smaller items, so bartering has become common.”
https://www.theguardian.com/world/2018/jul/25/venezuela-inflation-crisis-nicolas-maduro
“The new Brexit secretary has promised to ensure “there is adequate food supply” if the UK crashes out of the EU without a deal. Dominic Raab finally confirmed the government was making extraordinary plans to stockpile food in case the negotiations fail – having refused to do so two days ago.”
“Foreign investors shed record volumes of Italian debt in May as a sharp sell-off hit the country’s bond market, according to data highlighting the challenges facing the new populist government in the coming months. Italy’s governing coalition is set to bring forward a contentious budget this autumn, which some investors fear could threaten the country’s fiscal outlook.”
https://www.ft.com/content/80c92150-8f34-11e8-b639-7680cedcc421
“The [Eurozone] PMI survey, published ahead of the European Central Bank governing council’s regular meeting on Thursday, signals conditions could weaken further in the coming months. Companies say fresh orders are drying up and some have signalled they are beginning to rein in spending on the back of concerns over trade and higher prices for raw materials.”
https://www.ft.com/content/d9b267fc-8f18-11e8-bb8f-a6a2f7bca546
“China has a choice between a whimper today and a destructive bang tomorrow. It can curb the debt surge and allow growth to slow now, or risk a crisis followed by a more severe slowdown later.”
https://www.ft.com/content/0c7ecae2-8cfb-11e8-bb8f-a6a2f7bca546
Looks like the trade war is forcing China to go the ‘destructive bang’ route:
“The People’s Bank of China injected some $74 billion worth of medium-term lending facility loans into its banking system overnight, in a move considered to be the start of a new phase for China… “China seems to be re-activating its old engines of growth, accepting higher leverage which eventually may impact credit risk…”
“The pool of funds Australia’s big four banks are increasingly accessing to source home loans has become more expensive. In some cases, it is as expensive as it was during the height of the global financial crisis.”
http://www.abc.net.au/news/2018-07-25/perfect-storm-for-major-banks-as-pressure-mounts/10031412
“…there are growing concerns [in the US] that the higher house prices and rising mortgage rates will cause demand to slow.”
“David Rosenberg is pretty certain he knows how the bull market in stocks will end. The Gluskin Sheff chief economist and strategist expects widening spreads will tear it apart. “The corporate bond market is today’s bubble, just like the mortgage market a decade ago was the bubble back then,” he said Monday on CNBC’s “Trading Nation.”
““Something tells me in the next six months that we’re going to have a dramatic widening in credit spreads,” said Rosenberg. “I know what happens in the tail end of every Fed tightening cycle.””
https://www.cnbc.com/2018/07/23/david-rosenberg-issues-bubble-warning-it-will-hit-bull-market.html
