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‘We Might Have To Cut ‘Em Loose’: There Are Worse Things In The World Than An Emerging Market Rout, Right?

"I gotcha, I gotcha ... oops." When "selections" become "choices" again, we have to decide whether that's ultimately a "bad" turn of events or whether it's just an inevitable (and ultimately desirable) consequence of a return to two-way markets. 

So, I talked a bit on Thursday about how, in the post-crisis world driven as it is by the relentless hunt for yield catalyzed by DM central banks, everything has converged on one trade. That discussion was part of a piece about Italy I digitally penned for Dealbreaker and as I'm prone to doing, I turned a post ostensibly written to make a point about a specific market into a comment on cross-asset strategy in a QE-driven world. That tendency of mine (to try and reinvent wheels with every post) is probably annoying for some readers, but the bright side is that it helps me (if maybe not you) keep track of the overarching market narrative. Here are some excerpts: In one way or another, all the bids are price insensitive these days, whether by definition (e.g., central banks), by choice (e.g., Norway’s SWF) or else by accident (e.g., retail investors not understanding that ETFs don’t generally contribute to price discovery). Everyone else is effectively forced to adopt a similarly “long hair don’t care”-ish strategy because what else are you going to? When everything is indiscriminately bid to infinity and that dynamic traces its roots to policymakers with printing pres
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1 comment on “‘We Might Have To Cut ‘Em Loose’: There Are Worse Things In The World Than An Emerging Market Rout, Right?

  1. […] dollar strength and a hawkish interpretation of the Fed minutes could potentially pile more pressure on emerging markets. EM FX is coming off its six weekly loss in […]

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