A Minsky Moment?


EM Crisis: Oil and emerging markets
Russia: Full blown currency crisis
United States: Better IP data
Eurozone: Bundesbank irrelevant now
China: Business sentiment slows

Good morning,

Unfortunately, the last time I saw something like this oil was at $14 a barrel and Russia defaulted, devaluated and sent the world into a tailspin in August 1998. This culminated with the end of LTCM and prompted Greenspan to cut rates aggressively, leading to the liquidity tsunami, which financed the dot.com boom. So what’s going on in Russia, oil and emerging markets is not immaterial and we cannot be sure it will be localised.

Despite this chaos, China (where we are long) has been the only market of any note to be up on the month! This is more luck than genius.

I acknowledge that in the medium term, the positive economic effects of cheaper crude are considerable, but the markets are panicking and everyone is being hit. The emerging markets are simply moving down with oil, as you can see from the chart below.

Download a FULL PDF version of the Daily Note:

Global Macro-Daily Note 16th December 2014


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