Some bad mojo in the air

Tsing Tao

Tsing Tao

Turkish central bank hikes a surprisingly massive shock and awe 425bps and the Lira rallies, only to be higher than pre-announcement less than 24 hours later. ZAR same thing - suprise 50 bps hike and it's tanking. Aussie getting pummeled. All of this on the worry of a mere 10B fed tapering. When Turkey goes, Greece is next, and then watch the dominoes go.

And people think the Fed can exit QE? What a laugh.
 
Foreign bank exposure to Turkey (with the Greeks being the largest).

20140121_turkey1.png
 
Martinghoul said:
Hmmm, I was under the impression that TRY and ZAR issues are all about domestic politics rather than the tapering...
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So, my dear Fed apologist, they can't be about both, is that it?

Is it politics affecting the RUB, INR, HUF, etc...

Emerging markets are teetering. All the analysts for the past month seem to tie it to tapering (although, in fairness, particularly in Turkey, the political realm is a substantial portion) but you know better than any of them, is that it?
 
Covertibility said:
Current account deficit problem!!

Fed taper, lmao! Some of you should stop reading ZeroSense.
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Some of you need to get some sense in the first place. Do you even understand how a Current Account works and why money flows into emerging markets in the first place? Or why it leaves?
 
Tsing Tao said:
So, my dear Fed apologist, they can't be about both, is that it?

Is it politics affecting the RUB, INR, HUF, etc...

Emerging markets are teetering. All the analysts for the past month seem to tie it to tapering (although, in fairness, particularly in Turkey, the political realm is a substantial portion) but you know better than any of them, is that it?
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No, I don't know better, and no, I don't know who "all the analysts" might be...

I do agree that, to an extent, everything that's been happening in EM over the past year has been precipitated by the inevitable tightening by the Western CBs, however gentle and gradual. However, I am also 100% certain that it's the underlying problems (e.g. current account imbalances, political dysfunction, etc) of all of the weaker EM countries, e.g. Russia, Hungary, Ukraine, India, Turkey, South Africa, which are behind the current turbulence. It's just that these issues were previously obscured by the capital inflows from the West. Now that the music is stopping, we're just able to separate the wheat from the chaff, the "good" EM from the "bad" EM.
 
Fed tapers another 10B, and almost every emerging market currency is suddenly, in the last 20 min, experiencing significant "political" issues again.
 
Tsing Tao said:
Fed tapers another 10B, and almost every emerging market currency is suddenly, in the last 20 min, experiencing significant "political" issues again.
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Nah, the EM ccies vs USD exchange rates are just experiencing a natural repricing, as is risk more generally.

I am really confused... I thought you're in favor of the Fed winding down QE in order to stop the distortions that they've been causing in the mkt?
 
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