EU SENTIMENT SUFFERING FROM ONGOING EM VOLATILITY

-- EXCERPTED FROM 09-11-18 - ""The Race To The Top": How The Fed Unleashed A Global Liquidity Crisis" --

Just as Japan was the catalyst for the 1998 Asian crisis, so Europe will be the spark that makes the current EM turmoil into a global crisis, and as direct evidence he showed the recent collapse in German foreign factory orders, an indication of how hard EMs have been hit in recent months, and that it is only a matter of time before Europe's export powerhouse suffers too.

Validating this point, it is hardly a surprise that while the correlation of US equity markets to EM equities remains negative at present, the correlation between European equities and EM equities has been significantly positive over the last few months.