Loading ...The global liquidity backdrop is in the process of profound – if not yet obviously discernable – change. EM is increasingly vulnerable to a destabilizing bout of de-leveraging in a world of waning liquidity. Thus far, the faltering EM Bubble has incited flows to U.S. Bubble markets. However, an escalation of the unfolding EM crisis is at heightened risk of inciting a very problematic global de-leveraging – a “risk off” backdrop that would risk piercing vulnerable Bubbles even at the “core.” The consensus bullish view – holding EM as a buying opportunity and the U.S. as the mighty pillar of growth and stability – could prove dangerously complacent.
I believe there are great latent fragilities associated with the “Periphery to Core Crisis Dynamic.” Distorted markets have over years been conditioned to disregard such risk. I’ll presume the administration is simply oblivious, believing it’s deftly playing a hand of robust U.S. financial and economic systems. With such a competitive advantage, in their minds there’s never been a better opportunity to play hardball and put Beijing in its place.
http://creditbubblebulletin.blogspot.com/2018/08/weekly-commentary-periphery-to-core.html