Deep Dive: Emerging Markets

Analysts have been trying to forecast or spot a recession in the United States for years, looking for the classic disinflationary recession. And maybe we’ll still get one in the year ahead. But fiscal dominance is a different environment than the past four decades in the United States, and in many ways the United States already went through an emer

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Global liquidity, which I measure as global broad money supply of major currencies, translated into a dollar denomination, continues to be rangebound as well. The weaker dollar index has been supportive for global liquidity growth in recent months, but China’s flat money supply from March 2024 to the present has been a drag on global liquidity grow

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Basically, if someone went into these past couple of years owning a house with a low fixed-rate mortgage, a portfolio of financial assets, and decent income, then they’re probably feeling pretty okay right now, economically speaking. However, those who didn’t manage to get a house before mortgage rates rose sharply, and/or who don’t have a lot of f

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And they tend to approximately rotate together. Decades where American growth stocks do well and the dollar is strong tend to be the decades where value stocks, emerging market stocks, and gold/commodities collectively underperform. And then when an asset rotation occurs, American growth stocks (which at that point are quite expensive along with a

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Back in the 1990s, the United States had a legal conflict regarding using encrypted communications. Phil Zimmerman developed Pretty Good Privacy or “PGP” in the early 1990s, which was free and open-source peer-to-peer encryption software. It spread internationally, and so the U.S. government launched a criminal investigation into Zimmerman for “exp

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(Early 2020 was a big exception to that, since the fiscal impulse and the rate of quantitative easing were so big that they overrode the rise in the TGA, which on its own would be negative for liquidity. The TGA was only increased that high basically for extra financial buffer to support everything else that was happening, since the sheer magnitude

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The first and more notable one was the payroll data. Back on August 21st, the BLS revised job numbers downward by 818,000 or about 30% for the 12-month period from April 2023 through March 2024. This is the biggest downward revision since 2009. They still estimate that jobs were created, but 818,000 shy of the previously reported cumulative number

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Back in 2020, the misery index briefly spiked due to lockdown-induced unemployment, and consumer sentiment fell, but that reversed quickly as lockdowns ended and as fiscal stimulus went out to people and businesses. In 2022, as inflation washed over the economy, the misery index rose to very high levels, and consumer sentiment fell to deeply recess

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characterize two types of recessions.

-The first type of recession leaves most people relatively unaffected, but is really bad for the much smaller subset that lose their jobs. This is a classic disinflationary developed market recession.

-The second type of recession spreads the pain a bit more broadly. Perhaps a third or half of people are experien

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