Emerging Markets: Not Cheap

Published on
March 20th, 2019
Duration
18 minutes

Emerging Markets: Not Cheap

Trade Ideas ·
Featuring Teddy Vallee

Published on: March 20th, 2019 • Duration: 18 minutes

Teddy Vallee, founder of Pervalle Global, joins Real Vision for the first time to explain why Wall Street has it wrong on emerging markets. He analyzes the sector’s valuation, discusses the important role of China’s credit creation, and highlights how to play the thesis, in this interview with Jake Merl. Filmed on March 19, 2019.

Comments

  • RA
    Robert A.
    25 March 2019 @ 18:18
    Excellent first timer and good job by the interviewer. Pithy and concise trade presentation with assumptions, reasoning, levels and contra arguments—thanks RV.
  • F
    Floyd .
    22 March 2019 @ 23:15
    constructive and helpful to get a contrarian view. Articulated risks to trade well however seems to be a very short term trade with a lot of risk.
  • DM
    Daniel M.
    22 March 2019 @ 07:12
    Would be great to get the charts in the transcript
  • MA
    Muhammad A.
    21 March 2019 @ 23:58
    Exceptional.
  • CT
    CHRISTIAN T.
    21 March 2019 @ 23:17
    Substance!
  • SS
    Shanthi S.
    21 March 2019 @ 06:51
    Bring him back! :D
  • JW
    Joseph W.
    21 March 2019 @ 05:27
    Hi can we please make the volume control a gradiant and not just two options (mute or maximum volume)? Please and thank you. Keep up the great work!
  • DR
    David R.
    20 March 2019 @ 19:57
    Thumbs up for the excellent presentation and thought. But respectfully disagree about USD, as I've explained before in detail re technicals, fundies and sentiment. Long USD is the pain trade. I note that a number of EM Asian currencies (not china) are up 12-20% against USD from its peak, largely in recent weeks. So per what he said in the final minute in the interview, better flip his view as the market has spoken - BEARISH USD still.
    • DR
      David R.
      21 March 2019 @ 00:28
      Example, a currency Ted mentions is usd/myr which now is 4.055, down from 4.49 before... so MYR is up 11% against USD. Some other FX in east Asia are up more than MYR.
    • DR
      David R.
      21 March 2019 @ 00:48
      Just re-listened and yep I heard, ""So we think the dollar could actually appreciate from here. But again, we would gladly change our mind should these EM currencies start to strengthen versus the dollar." So numerous Asian EM currencies are up as much or more than the 6-8% you mentioned as the previous benchmark which foretold a sea change. You mentioned Aussie; AUDUSD is up almost 5% since about new year. So per your quote, since when this was recorded, you've "changed your mind"?
    • MB
      Michael B.
      21 March 2019 @ 02:47
      David, consider maybe putting together a brief YouTube video on your short dollar thesis, perhaps with an emphasis on which currency would benefit the most against the dollar. It’s difficult to get a cohesive view of your perspective based solely on your various comments that typically argue against the points being presented by the RV guest. I feel like you have good things to share and I am genuinely interested in seeing your data and thesis laid out plainly. Interested also in seeing how you factor in the massive amounts of international loans denominated in US dollar, originated while the dollar index was low and interest rates were also low, that are maturing now/soon or at least have regular servicing costs - everything from EM debt to russian residential mortgages and trillions in between. Because I’m thinking that while technical analysis is useful for equities, bonds, and commodities, the USD is not truly comparable to, say, tsla stock, german bunds, or sugar, which all have substitutes. In fact, I recently read in Gary Schilling’s newsletter that something like 95% of ALL fx transactions include the USD. This would seem to place the much maligned reserve currency of the world in a class of its own almost. While reserve currency status doesn’t mean the greenback will attract bids, what of the trillions in global debt denominated in USD that will need to be serviced and eventually paid back at predetermined times using a predetermined currency (USD)?
    • TV
      Teddy V. | Contributor
      21 March 2019 @ 22:28
      Hi DR - Thanks for the comment. I want to be clear in what I said since you seem to have missed it. During the 2016 rebound, the currencies of the basket I mentioned rallied significantly from their low points. Today, the equities have made a similar move, and over the same time period, the currencies have only strengthened marginally. Remember this is a basket.
    • TV
      Teddy V. | Contributor
      21 March 2019 @ 22:36
      Also, be careful with your bias. Your reference of AUDUSD strengthening 5% is quite telling. You have used the flash crash low in your return calculation, and it is quite obvious why you have chosen this point. Try to be intellectually honest with yourself and the rest of us. Thx
  • TR
    Travis R.
    20 March 2019 @ 14:30
    Great Twitter follow as well. @TeddyVallee
    • fc
      flavio c.
      20 March 2019 @ 16:54
      Indeed , awesome sharing of data and comments!! on my alerts in twitter
  • EB
    Eric B.
    20 March 2019 @ 12:58
    Great guest. Need to have Teddy back on. All data and a great analysis.
    • RS
      R S.
      21 March 2019 @ 06:04
      Speaks with clarity and data!
  • NG
    Nick G.
    20 March 2019 @ 12:26
    Makes complete sense. Funnily enough I flipped short EEM yesterday. Teddy's reasons are even better than mine.
  • FG
    Flavio G.
    20 March 2019 @ 12:02
    No drama, no BS, just well presented ideas. RV should post more from this guy. Will be nice to have him back reviewing his thesis in 3 months time.
    • EB
      Eric B.
      20 March 2019 @ 13:06
      I agree. Pure data-driven thesis. Very nice.
    • FG
      Flavio G.
      20 March 2019 @ 13:47
      Eric, compare this guy to the charlatans that make a philosophical lecture out of investment. Lot's of air, no substance. Those guys belong to academia or government where you don't have to bring results to earn a living.
    • fc
      flavio c.
      20 March 2019 @ 17:16
      he is a solid stream of data, analysis. No politics!
    • GO
      Greg O.
      21 March 2019 @ 09:23
      Great guest and awesome presentation. Perhaps he is so good because he puts money where his mouth is as apposed to many other guests coming to RV to sell you some advisory service. I don’t trade EM but it was pleasure to watch.
  • Nv
    Nick v.
    20 March 2019 @ 10:51
    Differentiated view. Nice