Emerging Markets

Published on: July 14th, 2017

It has been a great run for EM. However, technicals have run their course and negative rates in Europe and Japan won’t last forever. Don’t overstay your welcome!


  • R
    Raymon .
    8 March 2018 @ 07:15
    Hi Raoul, PMI's uniformly seem to be coming off highs, GDP's rolling over, long term charts; copper, oil, soybeans in downtrends. Is this transitory or are we setting up for next recession now??? How does this play out for JB's view of higher inflation and yields?? Thanks.
  • AM
    Anja M.
    8 August 2017 @ 13:26
    Julien, concerning this years divergence beween between EM and commodities I've recently read a comment from John Murphy. He is pointing to the fact, that the technology is also heavily weighted in the EM indices. Looking at the EEM-ETF Information Technology ist weighted over 25%; regarding the distribution by country over 55% come from China, Taiwan and South Korea. So may be the technology sector is contributing to the rise in EEM; potential future weakness in this sector may contribute to a correction in EEM. Anja
  • NB
    Neil B.
    7 August 2017 @ 00:37
    JULIAN: To add to my comments and analysis below in the earlier thread I posted ... interested in your thoughts and views on this. Since my comments posted last week EEM has continued to remain strong and really looks like a break out under way. of course there is major horizontal resistance at the 46 zone as Julian indicates but in keeping with my technical comments above even if price stalls out there it might be just a time out to build an even more compelling looking Right shoulder in the of the larger inverse H&S pattern I outlined might be in the cards. The current beak and continued stick above the downtrend channel though is certainly giving the bullish case more credence and potential for the larger H&S to come into play of course. How do you see this at this stage since your piece was written and published? On a side note, many times I've observed what seem to be a series of different sized and shaped nested and evolving H&S patterns and inverse H&S patterns around market tops and bottoms across different time frames. Almost seems to be indicative of the battle between bulls and bears as they duke it out before one side wins and the other side loses. Based on your vast array of analytical and experiential observation does this observation hold any water in your view? Thank You
  • NB
    Neil B.
    30 July 2017 @ 13:21
    JULIAN: Points raised and Questions posed below. Would be nice to receive your additional look and feedback to the forum here... Thank you for your piece. JULIAN, I've also been tracking/trading off the longer term chart weekly view of EEM and it's clearly been in a downtrend channel since 2010 hitting the top twice and bottom also twice which I don't think was pointed out in this piece. Playing off that channel trade has worked out well and I exited at the top of that channel in keeping with that trade approach recently several weeks ago. And the latest rally took it to the top off the inverse H&S JULIAN noted, however, it appears to have somewhat convincingly broken above the downtrend channel now after forming a bull flag just underneath it during May and June this year. Also, I have been previously noticing there "may" have been a much larger rightward downsloping inverse H&S pattern at play here. Take a look at the Sept 2014 thru April 2015 price action ( L shoulder ) and the August 2015 thru July 2016 price action ( H ) and finally the August 2016 thru March 2017 price action ( R shoulder ). The recent bullish break out above the long term downtrend channel perhaps to add quite a bit of credence to this much larger inverse H&S pattern? So far the recent break out seems to be holding well and the weekly MACD ( or PPO ) indicator appears to be supportive of this price launch thus far ( sloping upwards and no negative divergence profile from what I see - the signal line has just crossed again over top of the PPO and both lines are upwards sloping and above the previous waves up in the overall MACD ( PPO ) since it double bottomed between September 2015 and February 2016. So I'd really be interested in JULIAN's view of this. The point being in my mind that if/when EEM retraces back from it's recent break out that it could "simply" head for a back test of the downtrend channel break out which, depending on how long that might take, provide price action with some pretty good price support running from the $41.50 to the $40.00 level which if successfully holds could launch EEM quite a bit higher. This back test of the break out could might serve as a rational risk/reward entry into the bigger picture trade should one want to enter or re-enter ( with associated stop in mind or in place of course ). So, despite the divergence with EMB and Commodity performance, could EEM potentially, on this most recent longer term price action down channel trend bullish break out, in and of itself, be signaling something transformative in terms of the EMB and Commodity themes? Also I'd just like to point out in terms of the inverse ETF play ( and apologies if this is common knowledge within these circles already but many people don't realize it so I'll point it out ), for anyone who is looking to play any of the inverse ETF's ( like the one JULIAN noted in his piece the EUM ) to keep in mind the "decay" which inverse ETF's experience. If one is in an inverse ETF and even if the underlying trades sideways the inverse ETF over time will experience price "decay" ( i.e. decline in price ). If the underlyng actually goes opposite ( i.e. in an unfavorable direction to your inverse ETF position ) then it gets even worse since not only will the inverse ETF lose commensurate value as the underlying goes against you but also the inverse ETF will the entire time experience on top of that the effects of "decay". The "decay" over time in any inverse ETF comes from the underlying mechanisms that an inverse ETF must employ to provide returns or losses opposite the underlying. And perhaps, needless to say, if one engages in any of the leverages ETF's ( in these cases either inverse or straight ) this whole "decay" reality multiplies exponentially over time. Just take a look at any longer term chart of any inverse ETF who's underlying has either been going sideways or up and you will see the shape of a hockey stick. So when using them it's extremely important to be patient and have a very strategically and tactically pre-planned "tight and light" approach. Thanks
    • KA
      Kelly A.
      6 August 2017 @ 20:51
      Neil B. Love your thoughts and questions. Keep it up. You make us all better. Thanks.
    • NB
      Neil B.
      7 August 2017 @ 00:34
      Thank You Kelly. Posted a bit more above in a new thread to keep it fresh and perhaps get noticed for consideration.
  • RM
    R M.
    25 July 2017 @ 16:02
    Echo on Don's comment. This and Raoul's Dollar report are exactly what I hoped RV MI would be when I signed up today. This report is entirely logical to me. I would note that China (KBA, FXI, HAO, KWEB) have all broken out. What would make these a failed breakout? Thanks.
  • sB
    sylvain B.
    19 July 2017 @ 12:04
    Won't be so bearish for now as EM is breaking out and virtually flat for 10Y + CRB index making new high and USD weak as FED is dovish AUD bouncing along Iron Ore. all this factors don't point for a sizable correction
    • JB
      Julian B. | Contributor
      24 July 2017 @ 21:33
      Hi Sylvian. What I'm hearing suggests that its dangerous to assume the Fed is that dovish. Especially, given that the market has jumped to the conclusion that after the recent inflation data; "ding dong the witch is dead". Yet, Yellen's base case remains tapering in September and a hike in Dec. Their forecasts suggest a pick up in core inflation between now and year end. Plus wage inflation that is finally on the cusp of a breakout. PS. My models agree
  • JM
    Jared M.
    22 July 2017 @ 03:43
    I'm curious about your thoughts on E.M. On the African continent, seems to have serious value as an investment
    • JB
      Julian B. | Contributor
      24 July 2017 @ 21:26
      Hi Jared. Structurally, I'm a big fan of some of the African story but its a bit too long term for me. It also lacks the data I need for my models and they are an essential piece of anchoring my views. Maybe Raoul has a view?
  • AG
    Abhimanyu G.
    18 July 2017 @ 14:45
    Thanks Julian, very insightful piece! Looks like the MSCI EM INDEX (MXEF) is potentially breaking out from a 8-9 yr downtrend. I guess we will wait to see if it can break the trend line on a monthly close, and how price reacts at your defined resistance at the top of the 2012-15 range .
    • JB
      Julian B. | Contributor
      24 July 2017 @ 21:24
      Yes price action is key here, because as you said there's a lot of resistance up around 45 on the ETF EM . I'd also point you to Raoul's piece on the dollar. If these are the lows EM would be vulnerable. Finally, make sure you read next weeks piece because as I mentioned below any accelerative weakness in European bonds is a real threat to all EM assets.
  • gm
    gordon m.
    15 July 2017 @ 01:18
    Another question - you talk about EM equities and currency risk. What are your thoughts on EM dollar denominated sovereign debt ?
    • JB
      Julian B. | Contributor
      24 July 2017 @ 21:17
      Hi Gordon. At present, I'm not a fan of any bonds and that includes $ denominated EM debt such as the EMB ETF. Firstly, since the BoJ launched NIRP at the start of last year, the space has seen HUGE inflows. Secondly, I'm very concerned that we have a bond bubble in Europe, which has started to correct. In the spring of 2015, which was the last time Bunds corrected EMB dropped 10%. Finally, when I look at Risk Parity and similar leveraged balanced portfolios, one of their best performing assets has been EM $ debt. Bottom line you don't need to run for the doors but now is not a time to be complacent.
  • CD
    Cheryl D.
    19 July 2017 @ 20:47
    Great project! Really excited! I would like to hear more on your long term India investments. If you could fit that in at some point it would be great.
  • gm
    gordon m.
    15 July 2017 @ 01:10
    In other talks Raoul has said he likes India as a long today. When you say to avoid EM long, does that include India ?
    • gg
      gurdeep g.
      15 July 2017 @ 10:11
      Ive taken some profits off in a few EM equities and INDU as a wait and see how EEM responds to 44-46 resistance zone. If that helps, depends on your timeframe. Raoul works on the latter is my impression
    • RP
      Raoul P. | Founder
      17 July 2017 @ 23:49
      Gordon - Remember that Julian and I have very different time horizons on things like this. India is an investment for 10 years plus, not a trade. There will be big corrections along the way, which we will need to buy. So it needs to be sized accordingly and the ups and downs ignored. Most EM investments are shorter term in nature and will risk seeing outflows. It is key to know what your own time horizon is and the level of pain you are prepared to take in an investment vs a trade.
  • RH
    Robert H.
    15 July 2017 @ 08:37
    Any chance you could look specifically at Hong Kong equities? The stock connect program allows PRC institutions to send money overseas now- the money actually stays in China, but they can diversify. Huge amounts of money preparing to come in from the mainland, plus on the international side global funds are still very underweight.
  • FA
    Felix A.
    14 July 2017 @ 21:26
    great insight same here.
  • DG
    Don G.
    14 July 2017 @ 20:41
    Excellent! This is the exact sort of analysis I was hoping for. I like the suggestion of specific vehicles to trade. Thanks for the wonderful product.

Mark Yusko

Morgan Creek Capital Management, Co- Founder, CEO, & CIO

Mark Yusko is the Founder, CEO and Chief Investment Officer of Morgan Creek Capital Management. He is also the Managing Partner of Morgan Creek Digital Assets.

Morgan Creek Capital Management was founded in 2004 and currently manages close to $2 billion in discretionary and non-discretionary assets. Prior to founding Morgan Creek, Mr. Yusko was CIO and Founder of UNC Management Company (UNCMC), the Endowment investment office for the University of North Carolina at Chapel Hill. Before that, he was Senior Investment Director for the University of Notre Dame Investment Office. Mr. Yusko has been at the forefront of institutional investing throughout his career. An early investor in alternative asset classes at Notre Dame, he brought the Endowment Model of investing to UNC, which contributed to significant performance gains for the Endowment. The Endowment Model is the cornerstone philosophy of Morgan Creek, as is the mandate to Invest in Innovation.

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SkyBridge Capital, Founder & Co-Managing Partner

Prior to founding SkyBridge in 2005, Scaramucci co-founded investment partnership Oscar Capital Management, which was sold to Neuberger Berman, LLC in 2001. Earlier, he was a vice president in Private Wealth Management at Goldman Sachs & Co. In 2016, Scaramucci was ranked #85 in Worth Magazine’sPower 100: The 100 Most Powerful People in Global Finance. In 2011, he received Ernst & Young’s “Entrepreneur of the Year –New York” Award in the Financial Services category. Anthony is amember of the Council on Foreign Relations (CFR), vice chair of the Kennedy Center Corporate Fund Board, a board member of both The Brain Tumor Foundation and Business Executives for National Security (BENS), and a Trustee of the United States Olympic & Paralympic Foundation. He was a member of the New York City Financial Services Advisory Committee from 2007 to 2012. In November 2016, he was named to President-Elect Trump’s 16-person Presidential Transition Team Executive Committee. In June 2017, he wasnamed the Chief Strategy Officer of the EXIM Bank. He served as the White House Communications Director for a period in July 2017. Scaramucci, a native of Long Island, New York, holds a Bachelor of Arts degree in Economics from Tufts University and a Juris Doctor from Harvard Law School.

Michael Saylor

MicroStrategy, Co-Founder

Mr. Saylor is a technologist, entrepreneur, business executive, philanthropist, and best-selling author. He currently serves as Chairman of the Board of Directors and Chief Executive Office of MicroStrategy, Inc. (MSTR). Since co-founding the company at the age of 24, Mr. Saylor has built MicroStrategy into a global leader in business intelligence, mobile software, and cloud-based services. In 2012, he authored The Mobile Wave: How Mobile Intelligence Will Change Everything, which earned a spot on The New York Times Best Sellers list.

Mr. Saylor attended the Massachusetts Institute of Technology, receiving an S.B. in Aeronautics and Astronautics and an S.B. in Science, Technology, and Society.

Alex Saunders

Nugget's News, Founder & CEO

Alex Saunders is the founder and CEO of Nugget’s News, a digital media company focused on all things crypto. Alex has been captivated by cryptocurrency since 2012 and in 2017 he began educating globally on the benefits of cryptocurrency and how to safely acquireit. Nugget’s News has been listed as a top-20 podcast by Business Insider, ShapeShift and Lifehacker and has over 120k YouTube subscribers with 9 million total views.Alex is also heavily focused on his cryptocurrency education platform Collective Shift which currently serves over 4,500 members. provides his unique perspectives by utilising his expertise in fundamental analysis, technical analysis and market sentiment. He is working towards his mission of making it easier for everyone to understand the financial world.

James Putra

TradeStation Crypto, Inc., Sr. Director of Product Strategy

James helped launch TradeStation Crypto’s offering which utilizes a true online brokerage model that self-directed investors and traders have come to expect for equities, futures, and foreign currency markets. He is a reputed crypto asset specialist and blockchain thought leader focused on helping people find innovative ways to participate in this space. He is active in the blockchain community with speaking engagements, TV appearances and mentoring. James has over 15 years of experience in the Fintech industry.

Raoul Pal

Real Vision, Co-Founder & CEO

Raoul Pal is the Co-Founder and CEO of Real Vision, the world’s pre-eminent financial media platform, which helps members understand the complex world of finance, business, and the global economy.

Real Vision members also have access to Real Vision Crypto, a cryptocurrency and digital assets video channel watched by over 80,000 people. In addition, Raoul has been publishing Global Macro Investor since January 2005 to provide original, high quality, quantifiable and easily readable research for the global macro investment community hedge funds, family offices, pension funds and sovereign wealth funds. It draws on his considerable 31 years of experience in advising hedge funds and managing a global macro hedge fund. Global Macro Investor has one of the very best, proven track records of any newsletter in the industry, producing extremely positive returns in eight out of the last twelve years.

He retired from managing client money at the age of 36 in 2004 and now lives in the tiny Caribbean island of Little Cayman in the Cayman Islands. Previously he co-managed the GLG Global Macro Fund in London for GLG Partners, one of the largest hedge fund groups in the world. Raoul moved to GLG from Goldman Sachs where he co-managed the hedge fund sales business in Equities and Equity Derivatives in Europe. In this role, Raoul established strong relationships with many of the world’s pre-eminent hedge funds, learning from their styles and experiences.

Other stop-off points on the way were NatWest Markets and HSBC, although he began his career by training traders in technical analysis.

Peter McCormack

What Bitcoin Did, Journalist

Peter McCormack is a full time journalist/podcaster covering topics such as Freedom, Human Rights, Censorship and Bitcoin. Peter created and hosts the What Bitcoin Did Podcast, a twice-weekly Bitcoin podcast where he interviews experts in the world of Bitcoin development, privacy, investment and adoption. Launched in November of 2017, the podcast has grown to over 100 episodes with a guest list that is a testament to the diversity of knowledge and opinions that represent the broader Bitcoin community. Expanding his growing list of human interest recordings, documentaries and films Peter has recently launched the Defiance podcast and DefianceTV.

Caitlin Long

Avanti Financial Group, Founder & CEO

22-year Wall Street veteran who has been active in bitcoin and blockchain since 2012. In 2018-20 she led the charge to make her native state of Wyoming an oasis for blockchain companies in the US, where she helped Wyoming enact 20 blockchain-enabling laws. From 2016-18 she jointly spearheaded a blockchain project for delivering market index data to Vanguard as chairman and president of Symbiont, an enterprise blockchain start-up. Caitlin ran Morgan Stanley’s pension solutions business (2007-2016), heldsenior roles at Credit Suisse (1997-2007) and began her career at Salomon Brothers (1994-1997). She is a graduate of Harvard Law School (JD, 1994), the Kennedy School of Government (MPP, 1994) and the University of Wyoming (BA, 1990).

Hunter Horsley

Bitwise Asset Management, CEO

Hunter Horsley is Chief Executive Officer of Bitwise Asset Management. Prior to Bitwise, he was a product manager at Facebook, working on advertiser products including the multibillion-dollar sponsored content ecosystem and ad breaks in videos. Before Facebook, Horlsey was a product manager at Instagram, responsible for multiple advertising products generating several hundred million dollars of revenue. He is a graduate of the Wharton School at the University of Pennsylvania, with a B.S. in economics. Recently, Horsley was named a member of Forbes’ 2019 “30 Under 30” list.

Luke Gromen

Forest For The Trees, Founder & President

Luke Gromen has 25 years of experience in equity research, equity research sales, and as a macro/thematic analyst. He is the founder and president of macro/thematic research firm FFTT, LLC, which he founded in early 2014 to address and leverage the opportunity he saw created by applying what clients and former colleagues consistently described as a “unique ability to connect the dots” during a time when he saw an increasing “silo-ing” of perspectives occurring on Wall Street and in corporate America.

FFTT caters to institutions and sophisticated individuals by aggregating a wide variety of macroeconomic, thematic and sector trends in an unconventional manner to identify investable developing economic bottlenecks for his clients. Prior to founding FFTT, Luke was a founding partner of Cleveland Research Company, where he worked from 2006-14. At CRC, Luke worked in sales and edited CRC’s flagship weekly thematic research summary piece (“Straight from the Source”) for the firm’s clients. Prior to that, Luke was a partner at Midwest Research, where he worked in equity research and sales from 1996-2006. While in sales, Luke was a founding editor of Midwest’s widely-read weekly thematic summary (“Heard in the Midwest”) for the firm’s clients, in which he aggregated and combined proprietary research from Midwest with inputs from other sources.

Luke Gromen holds a BBA in Finance and Accounting from the University of Cincinnati and received his MBA from Case Western Reserve University. He earned the CFA designation in 2003.

Meltem Demirors

CoinShares, Chief Strategy Officer

Meltem Demirors is Chief Strategy Officer of CoinShares, an investment firm that manages billions in assets on behalf of a global investor base, and is a trusted partner to investors and entrepreneurs navigating the digital asset ecosystem. Meltem oversees the firm’s managed strategies group and its New York office and leads corporate development.

Previously, she was part of the founding team of Digital Currency Group. As a veteran investor in the digital currency space, she has invested in over 250 companies in the ecosystem.

Meltem is passionate about education and advocacy, and teaches the Oxford Blockchain Strategy Programme and co-chairs the WEF Cryptocurrency Council.