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The Dirty Little Secret Behind The EM Rally…
So on Saturday in "How Is This Even Legal? EM Debt Fund Cash Balances Hit 4-Year Lows," we noted the rather disconcerting trend in EM debt fund cash levels, which are approaching multi-year lows on the assumption that inflows into these funds will continue.
Note we used the term "assumption." If that assumption turns out to be wrong, then it's not 100% clear to me how these funds are going to deal with outflows without selling the underlying bonds which leads directly to questions about how liq
EM is not at all homogenous but some of them are so ridiculously bullish fundamentally that anyone can become a rock star here by just buying almost anything and watch it double this year. Especially real estate, which is now up 46% YTD on top of sizeable currency gains. Only fools and performance laggards buy DM.
“Only fools buy DM”
you’re probably right about that at this juncture.
I think EM is a disaster waiting to happen for a laundry list of reasons, but not sure it makes any more sense to buy DM than EM.
at least with EM you’ve got an opportunity to capitalize off idiosyncratic bullish stories, which is exactly what Irb is saying.
good