Emerging Troubles

Published on
17 August, 2018
Topic
Trading, FX, ETF
Duration
16 minutes
Asset class
Equities

Emerging Troubles

Featuring Tony Greer

Tony Greer, founder of TG Macro, discusses his outlook for emerging markets as Turkey’s currency crisis fuels fears of financial contagion. He explains why he’s adding to his short position on an emerging market ETF in this interview with Justine Underhill. Filmed on August 15, 2018.

Published on
17 August, 2018
Topic
Trading, FX, ETF
Duration
16 minutes
Asset class
Equities
Rating
20
Sharing

Comments

  • CJ

    Craig J.

    5 10 2018 08:40

    0       0

    Great call Tony

  • DR

    David R.

    27 8 2018 14:15

    0       1

    Another week, another weak start of the dollar. The dollar chart is broken. Very ugly. The only Emerging problem for the coming weeks will be the crashing dollar, exacerbating the already running-away inflation numbers in the US. Better get your investments out of US if you haven't already, ASAP. Sure, US stocks are rising, but the dollar is falling just as fast, as international investments are crushing US investments again, just like for the 14 months before February. The worm turns, again.

  • AE

    Alex E.

    20 8 2018 20:45

    0       0

    A lot of noise vis-a-vis dollar direction. Seems a lot of people have forgotten that Fed is shrinking balance sheet to the tune of $60 B per month starting October. On top of increasing interest rates, how on Earth is this bearish for the Dollar? Less dollars available makes it worth more. Or is there some sort of magic wand the Orange one is going to wave and make the dollar suddenly worth less???

  • DR

    David R.

    20 8 2018 16:34

    2       0

    To follow up, yet another bearish key reversal in the plunging dollar today. Barring a remarkable turnaround in the final hours, price action over the past week demonstrates that the primary dollar bearish trend has re-asserted itself. Again, the term "dollar strength" is a false narrative as in FACT the reality is dollar WEAKNESS. Whether this spills into a renaissance of EM strength is yet to be seen, although select EM markets never were weak and those are likely to accelerate so be selective.

  • DR

    David R.

    20 8 2018 00:34

    1       0

    Something else I'd worry could blindside that thesis. What does "macro" say happens in two weeks after Labor Day, when suddenly the imminent US elections take center stage, with the prospect of a fast approaching probably lurch to the far left in congress with the power (and motivation) to start the presidential impeachment. It was pretty ugly for the dollar and all US assets in 1973-74 during the Nixon impeachment process and afterwards. The US twin deficits were bad then, but much worse now, and also back then like now inflation was in its early ascendancy. And the nifty stocks of the day, into which most equity investment was concentrated, collapsed into ashes, just like could happen again with today's few market darlings, as the impeachment gathered pace and the nation's mood soured and consumer confidence fell off a high cliff just like where it is today.

  • DR

    David R.

    20 8 2018 00:21

    1       1

    Convincing and interesting, but cherry picking the currency timeline without going far enough back to provide the correct technical perspective. Looks like the presenter opined long dollar just about on the day of at its peak, especially given the dollar collapse on Friday and the bearish key reversal both on the daily and the weekly against virtually every major currency. Ugly. Smart money had already moved out of the dollar (if not short yet), away from all the small fish and retail hacks. At this point, even restaurant waiters are parroting the "dollar strength" false narrative. Which, as any technician can plainly see on the chart, is farcical, as thus far it's merely been a bear market retracement, most likely over already, or else nearly over, for this move before reversing the other direction for months anyway. Good trading.

  • SB

    Stewart B.

    19 8 2018 17:09

    0       2

    One of the better 'Trade Ideas'. Thank you.

    It is worth considering a long period of ZIRP & printing in developed economies has funded and no doubt created misallocations in EMs. Central Bankers Statist/Socialist policies always have unintended consequences. Perhaps an EM crisis will be the next.

  • AK

    Anton K.

    19 8 2018 04:34

    4       2

    If you're Short EEM, you're Long Trump Derangement Syndrome (TDS). It's the same trade.

  • tW

    tgwtom W.

    18 8 2018 20:57

    3       1

    Beautifully presented and comprehensive thought process, This ability to seamlessly convey one's knowledge is admirable and very helpful.

  • DS

    David S.

    18 8 2018 20:08

    2       0

    I agree that your trade should work well. Watch out after the elections when US debts will take center stage. China is playing a long-term game whereas Trump is looking for short-term political gains. If China does not buy American oil, it can get plenty of oil from elsewhere. It already gets a lot of oil from Russian payable in Yuan. The oil market is too broad to be controlled by country. American oil can be easily diverted to China. China is now looking to help Turkey. They can fund plenty of influence by selling US bonds with the dollar high. All this disruption is helping Putin with Europe and the Middle East – Putin and Merkel meeting this week. At some point the Chinese market will be back to bargain levels, and I will buy then. The emerging market ETFs are too broad for me to understand, so I will leave them to much smarter investors. All the corporate tax savings going into stock purchases at high prices will prove non-productive for shareholders. The tax savings are a one-time effect. Interesting times, Best of luck trading. DLS

  • DB

    Douglas B.

    18 8 2018 16:59

    3       0

    I believe Raoul stated on Twitter that he is short EEM as well

  • RV

    Renoir V.

    18 8 2018 12:55

    2       2

    I think this trade is going to go really bas
    , really soon

  • WS

    Will S.

    18 8 2018 00:09

    8       33

    I'd seriously consider pursuing Justine for marriage. :-) Off topic...I know...but come on...

  • SM

    Sarit M.

    17 8 2018 21:02

    7       0

    I'm curious to hear a follow up from Tony about his FCX trade.

  • AK

    Arthur K.

    17 8 2018 20:47

    0       0

    Bad timing ? as Larry Kudlow says "low level" trade talks will start up again. This news was between when video recorded and published.

  • SH

    Steve H.

    17 8 2018 18:40

    3       0

    I assume this one was scripted in the White House?

    Incidentally, Turkey boycotting Apple might seem "ridiculous". China doing the same would sink US equity markets, US tax receipts (which rely inordinately on CGT), and worsen an already floundering fiscal situation. That's China's 'nuclear option', not selling USTs. Sure it would hurt China via the supply chain, but just as Putin rightly said that the North Koreans will "eat grass" before they'll agree to de-nuclearize (is that a real word?), so the Chinese are prepared to suffer in order to pursue China2025 - which is Trump's real target here. TG is far too sanguine about America's strength and invulnerability. As for his trade call - maybe, maybe not. Personally, I don't think I'd take it this side of Jackson Hole.

  • lD

    lance D.

    17 8 2018 18:02

    1       5

    HAHAHAH Most people lose their 'shirt' in the markets looks like this guy loses his SOCK...

  • AV

    Alberto V.

    17 8 2018 12:40

    1       7

    Emerging Troubles...is this a new chapter of Basic Instinct?

  • CY

    CHIHLUN Y.

    17 8 2018 11:55

    6       0

    Interesting discussion, and Tony has obviously anticipated some form of the current events playing out before it happened.
    One question I do have - if the dollar strengthening and tariff approach is so powerful as a tool - why it was not more appreciated or liberally applied in recent memory, especially if it comes with loss for the RoW and relatively little for the US?

  • CC

    Chris C.

    17 8 2018 10:43

    1       0

    Tony I always love your analysis “the market is spiking the football” but this ETF has non emerging market holdings. Some of its top holdings include Tencent, Alibaba, Taiwan semiconductor and Samsung. These aren’t emerging market companies. You don’t see these companies propping up this ETF even in bad times?

  • Nv

    Nick v.

    17 8 2018 09:56

    4       0

    Tony gave us the consensus view on the trade "landslide"
    Yet, the US is ex-stimulus and China has stimulus ahead of it - from here the S&P500 has more downside than the Chinese market
    Dollar strength will cause US earnings downgrades as 40% of S&P500 revenue is from offshore
    Apple has a China product boycott ahead in its most profitable market - do some research on what happened to Toyota, Huyndai, Kia, Lotte during Chinese product boycotts due to US-Japan and US-South Korea spats