11/12/17

SocGen Thinks Emerging Markets Are Breaking Down: Here's Why



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SocGen Thinks Emerging Markets Are Breaking Down: Here's Why
// Zero Hedge

With Goldman Sachs publishing at least one, and in most cases two or more weekly reports urging its clients to keep pouring capital into emerging market assets, whether equities, bonds or FX, it is no surprise that Emerging Markets remain the big winners in 2017, up 10% points more than developed this year.

However, as SocGen's Andrew Lapthorne cautions this morning, signs of weakness are starting to appear. The first indication that the party may be ending is that the MSCI EM was down 50bps last week, having fallen over 3% the week before and as we show below EM has broken its 2107 upward trend. Conversely, as Albert Edwards indicated this morning, the 14-week RSI on the S&P 500 is above 81 and hasn't been this high since 1995.

What is the connection between EM vs DM returns? It is hardly a secret that driving the EM versus DM performance in 2017, has been the weak US dollar. Andrew Lapthrone notes that this can be shown by comparing an ....

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