Summary: If you look at the last two posts on this site from Marc Chandler and from Sober Look the connection between Fed tapering and money flows is clear. Hot money is flowing out of emerging markets and into Europe. Below I explain why this is happening and what market warning signs to look for.
First, let me quote from Marc's post:
The US dollar stands at the fulcrum. Investment flows are leaving emerging markets, with currencies from Brazil, India, Indonesia and Mexico being hit the hardest over the last few sessions. The MSCI Emerging Market Index is off 4.5% over the past five sessions and the rout continues.
Falling commodity prices, country specific challenges, as in India, Indonesia, Brazil, and Turkey, coupled with anticipation that the days of low in...
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Edward Harrison is the founder of Credit Writedowns and a former career diplomat, investment banker and technology executive with over twenty five years of business experience. He has also been a regular economic and financial commentator in print and on television for the past decade. He speaks six languages and reads another five, skills he uses to provide a more global perspective. Edward holds an MBA in Finance from Columbia University and a BA in Economics from Dartmouth College.