Would love to ask for your view on emerging markets and the impact of USD strength and US tariff outlook. Most emerging market ETFs have been pummelled since the election result.
Along those same lines I would like to know your thoughts on VWOB (emerging markets bond fund) that we got out of months ago. You still recommending to stay out?
I don’t see why you would particularly want to own either at this moment, with the USD doing what it’s doing. And unlikely to turn for a while. Unlikely to outperform US equivalents.
What would need to happen for that trend to turn? Is that going to be mostly US-centric economic deceleration or Fed easing? Or is there anything we can think of internationally in emerging markets that would catalyze the growth? I can think of economic acceleration of China or sufficient stimulus, but all stimulus so far has been disappointing and undersized, if I understand correctly.
It’s mainly a USD effect. The market needs to see a reason for USD depreciation. A relative contraction of interest rate levels would do it. But we are going the other way at the moment: US rates are rising with stronger growth and EM growth rates are falling. Hence interest rate differentials are rising. in USD favour.
5 Responses
Would love to ask for your view on emerging markets and the impact of USD strength and US tariff outlook. Most emerging market ETFs have been pummelled since the election result.
Along those same lines I would like to know your thoughts on VWOB (emerging markets bond fund) that we got out of months ago. You still recommending to stay out?
I don’t see why you would particularly want to own either at this moment, with the USD doing what it’s doing. And unlikely to turn for a while. Unlikely to outperform US equivalents.
What would need to happen for that trend to turn? Is that going to be mostly US-centric economic deceleration or Fed easing? Or is there anything we can think of internationally in emerging markets that would catalyze the growth? I can think of economic acceleration of China or sufficient stimulus, but all stimulus so far has been disappointing and undersized, if I understand correctly.
It’s mainly a USD effect. The market needs to see a reason for USD depreciation. A relative contraction of interest rate levels would do it. But we are going the other way at the moment: US rates are rising with stronger growth and EM growth rates are falling. Hence interest rate differentials are rising. in USD favour.