Summary: One often hears the refrain "the market is not the economy", but what does that really mean? I am going to explain it in my terms here in the context of the global reflation trade - EM meltdown paradox.
As I wrote yesterday, my view is still that the global economy is in reflation/recovery mode. All of the major developed markets have better numbers from the US to Europe to Japan. And China also seems to be in reflation mode despite the desire of the Chinese government for rebalancing. To me, this means a improving global economic growth.
Yet, at the same time, the emerging markets are getting hit hard and I believe this owes to two factors. First, as markets anticipate the unwind of QE, liquidity is leaving EM, which was overbought due to easy money leavin...
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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.