Complacency has also benefitted bond and stock markets in emerging economies. Recent weeks have seen government bond yields falling in many of them, including Brazil, India, Indonesia, Mexico, and Turkey. The MSCI EM stock price index (in US dollars) is up 12.1% from its recent low on February 5, and 2.5% ytd. It is back to its level just prior to the taper tantrum. The Fragile Five have morphed into the Fab Five since March as both their currencies and stock price indexes (in dollars) rebounded.
Our Stay Home investment theme is back on top over Go Global on a year-to-date basis. Here’s the MSCI performance derby in dollars since the end of last year: US (4.0%), EMU (3.7), All Country World (3.2), EM (2.5), All Country World ex-US (2.4), BRIC (-0.4), Japan (-4.1), and China (-4.3). The top five MSCI are all for EMs: Turkey (21.6), Indonesia (21.0), India (18.2), Israel (17.0), and Philippines (16.3). This confirms my position that while EMs should underperform this year, some of them could outperform, but you have to pick the right ones.
Today's Morning Briefing: Fretting About Complacency. (1) Nothing to fear, but nothing to fear, again. (2) Corrections are MIA. (3) Complacent indicators. (4) Dudley is nervous. (5) Minsky’s moments are mostly geopolitical for the moment. (6) Stocks love Obama’s foreign policy. (7) Bond Vigilantes, Zombies, and Vivants. (8) George, Lacker, & Plosser are trigger-happy. (9) The ECB will lead the way until Thursday. (10) Urge to emerge. (11) Stay Home outperforming Go Global again.
