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Tag Archives: emerging markets

Latin America Was Already Steeped in Economic Problems. Now Come the External & Internal Shocks of COVID-19

Not even Brazil and Mexico have the fiscal and monetary leeway to offset those shocks. By Nick Corbishley, for WOLF STREET: Covid-19 is beginning to gain a foothold in Latin America. Even in some of the region’s tropical areas, the case numbers are rising at a startling rate. Ecuador, which appears to have caught the bug a month ago as a result of its close connections with Spain, now has over 1,300 cases — more than any other country in the region except for Brazil, which has over 12...

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New Currency Crisis Dawns: Mexican Peso Plunges to Record Low Against the Dollar

The flight into US dollars! Dollar-denominated debts of Mexican companies weigh heavily. By Nick Corbishley, for WOLF STREET: As the coronavirus crisis roils the global economy, the strengthening dollar is causing all manner of stress and mayhem for national economies and their respective currencies. Nowhere is this clearer than in Mexico, whose currency, the peso, never really recovered from the last crisis and is now collapsing all over again. As of 4 p.m. Monday (Mexican time), it...

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The World Is Awash in Easy Money

The Federal Reserve isn’t the only central bank cutting interest rates. In fact, the world is awash in easy money.The Fed met market expectations during the September FOMC meeting and lowered interest rates another 25 basis points. It was the second cut of the year and pushed the interest rate down to the range of 1.75 – 2%. Meanwhile, the European Central Bank took a decidedly dovish turn over the summer. It has even hinted at another round of “shock and awe” stimulus.And it’s not just...

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Contagion from Liquidity Crunch at Junk-Bond Funds to Trigger “Material Second Round Effects”: EU Securities Regulator

The costs of dodging negative interest rates. By Nick Corbishley, for WOLF STREET: In the event of a market shock, 40% of European funds focused on junk-rated bonds — ironically named “high-yield” funds — would not have enough liquid assets on hand to meet investor withdrawals, even if the withdrawals in one week amount to only 10% of the fund’s net asset value, the European Securities and Markets Authority (ESMA) warned this week, raising yet more concerns about the risks associated...

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Threat of Contagion to Eurozone from Spanish Banks’ Huge Bet on Emerging Markets: UBS

Spanish banks expanded aggressively into Emerging Markets to flee the consequences of the euro debt crisis. By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET. UBS has alerted that Spanish banks’ outsized exposure to Latin American markets could serve as a source of contagion for future crises: 80% of the Eurozone’s total banking exposure to the region is channeled through Spain whose banks have around €384 billion of counterparty claims in the region. A ‘shock’ in...

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Oops, Imports by China, Emerging Asia Plunge Most Since 2008

These unsettling tidbits about sudden problems on the demand-side in China. Imports by China and other emerging Asian economies in December plunged to the lowest level in two years, in the steepest one-month plunge since 2008, after having already plunged in November, according to the Merchandise World Trade Monitor, released on Monday by CPB Netherlands Bureau for Economic Policy Analysis, a division of the Ministry of Economic Affairs. For November and December combined, imports by...

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The Wild East: Airlines in South & Southeast Asia

Huge aircraft orders, booming traffic, dozens of upstarts with easy mega-funding, fierce competition, already a big collapse, and allegations of shady business. By MC01, a frequent commenter, for WOLF STREET: As of October 31, Airbus had 6,245 members of the A320neo family on order, of which around 250 had already been delivered. Even taking into account the large discounts which are the norm for large orders, the estimated value for this order book alone was in the region of about...

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Aircraft Leasing Bubble in Trouble?

Alarming signals are coming from an unlikely place, the market that the industry long touted as an engine of infinite growth. By MC01, a frequent commenter, for WOLF STREET: In 1990, leased aircraft accounted for 15% of airline fleets. By 2017, the overall fleet of aircraft had ballooned, and within this much larger overall fleet size, the share of leased aircraft had surged to 40%. There are three general reasons why companies lease aircraft: To operate without the financial burden of...

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Bank Shares in Mexico (and Beyond) Plunge as Incoming Government Threatens Core Business: Fee Gouging

Part of a global trend, as exasperated consumers are squealing, but no country has threatened to do what Mexico proposed. By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET. Mexico’s stocks are plummeting, with the S&P/BMV IPC index down 5.8% on Thursday — the worst drop in seven years — and another 2.8% by midday on Friday. The dollar-denominated ETF, iShares MSCI Mexico [EWW], plunged 11% over the past three days and is down 22% since August 8: What happened?...

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I Was Asked: “How & When Will the Next Financial Crisis Happen?”

China has a lot of balls in the air at the moment. FocusEconomics asked me and a bunch of other illustrious luminaries, “How and when will the next financial crisis happen?” First things first. A “financial crisis” is somewhat of a latex-term that can be defined in many ways and stretched in many directions. For our purposes, a recession or a stock-market crash is by itself not a financial crisis. They’re more or less normal parts of the credit cycle – or the business cycle as it used...

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