Trade Wars and a New Volatility Regime
Trade Wars → Less International Trade → Less Available Offshore USD → Weak EM currencies → Weak Equity Markets in EM
Trade wars have brought increased volatility to the system. As we stated in our first letter, the trade wars were noise and the real signal is the strong strategic competition between China and the United States.
The losers in the short term are Emerging Markets (EM) trapped in the crossfire. The VXEEM (volatility index) is signaling a new volatility r…
Keep reading with a 7-day free trial
Subscribe to Macrowise Newsletter to keep reading this post and get 7 days of free access to the full post archives.