Tuesday, June 7, 2016

Emerging Markets: Bleeding Indicator

Overnight we learned that China's FX Reserves resumed falling in May by $28 billion. Rough math indicates that the now abandoned "Shanghai Accord" saved them ~$80 billion from March through April.

China FX Reserves (red) with YuanUSD:

Of all of the indicators, Emerging Market stocks best predict global RISK OFF...

Divergence confirmed by NYSE Momentum:

USDJPY has been lingering near multi-year lows for two months now...waiting for the RISK ON rally to end, so that it can monkey hammer dumb beta overnight. Again...