Relevant and even prescient commentary on news, politics and the economy.

Portfolio Capital Flows to Emerging Markets amid the Pandemic

by Joseph Joyce

Portfolio Capital Flows to Emerging Markets amid the Pandemic

Among the most notable economic responses to the COVID-19 pandemic has been the turnaround in capital flows to emerging markets. A sudden reversal in portfolio flows of over $100 billion to these countries in March has been offset by a surge of capital this fall. But many of these countries have accumulated debt burdens that will affect their ability to recover from the pandemic.

The IMF examined portfolio flows to these economies in last April’s issue of the Global Financial Stability Report (see also here). The report showed that prior to the pandemic, bond portfolio inflows had been larger than equity portfolio flows, with cumulative flows since 2005 of approximately $2.5 trillion for bonds vs. about $1 trillion for equity. The bonds included both bonds denominated in foreign currency as well as local currency debt. These flows had constituted significant amounts of finance in the emerging and frontier markets’ debt and equity markets.

The authors of the report analyzed the determinants of the different types of portfolio flows. They reported that changes in global conditions (or “push factors”) are largely responsible for debt inflows. Among these factors are the VIX index, a measure of global risk appetite, the U.S. Treasury bond yield, and the foreign exchange value of the dollar. Equity flows are also influenced by foreign conditions, but domestic economic growth (a “pull” factor) is a larger factor in raising the likelihood of capital inflows. This reflects the dependency of the returns on portfolio equity on profitable business operations.

Portfolio Capital Flows to Emerging Markets amid the Pandemic

by Joseph Joyce

Portfolio Capital Flows to Emerging Markets amid the Pandemic

Among the most notable economic responses to the COVID-19 pandemic has been the turnaround in capital flows to emerging markets. A sudden reversal in portfolio flows of over $100 billion to these countries in March has been offset by a surge of capital this fall. But many of these countries have accumulated debt burdens that will affect their ability to recover from the pandemic.

The IMF examined portfolio flows to these economies in last April’s issue of the Global Financial Stability Report (see also here). The report showed that prior to the pandemic, bond portfolio inflows had been larger than equity portfolio flows, with cumulative flows since 2005 of approximately $2.5 trillion for bonds vs. about $1 trillion for equity. The bonds included both bonds denominated in foreign currency as well as local currency debt. These flows had constituted significant amounts of finance in the emerging and frontier markets’ debt and equity markets.

The US economy is primed for takeoff in 2021

 by New Deal democrat

The US economy is primed for takeoff in 2021

The fist vaccine against COVID-19 began to be distributed today. At last there is light at the end of the tunnel.

The pandemic has been dictating the state of the economy ever since it hit. But for the last several months and longer, the “high frequency” data I follow each week has painted a picture of an economy that “wanted” to accelerate.

But because the weekly data can be very volatile, a look at the more reliable, long-established leading indicators that are provided monthly or quarterly is worthwhile.

I have prepared a post doing exactly that, first with the long leading indicators that help us know the direction of the economy about 1 year out. This post is up at Seeking Alpha.

As usual, clicking over and reading should be informative for you, and a little bit $ rewarding for me.

Weekly Indicators for December 7 – 11 at Seeking Alpha

by New Deal Democrat

Weekly Indicators for December 7 – 11 at Seeking Alpha

My Weekly Indicators post is up at Seeking Alpha. Here’s the link:

https://seekingalpha.com/article/4394374-weekly-high-frequency-indicators-weakness-spreads-still-no-fundamental-change-in-outlook

With the big increase in jobless claims, as well as a deteriorating situation for restaurant dining, weakness has spread further among the indicators – but the forecast, both long and short term, remains very positive.

As usual, clicking over and reading should bring you up to the virtual moment, and I appreciate the jingle jangle of a penny or two extra in my pocket.

Weekly Indicators for November 30 – December 4 at Seeking Alpha

by New Deal democrat

Weekly Indicators for November 30 – December 4 at Seeking Alpha

My Weekly Indicators post is up at Seeking Alpha.

There is more evidence of weakening of the coincident data, probably as the result of the completely out of control pandemic. Some of that is probably due to new restrictions, some to winter weather causing people to curtail some activities, and some (probably most of all) to people becoming much more cautious about any activity that causes them to come into contract with others. 

As usual, clicking over and reading rewards me just a little bit for my efforts.

New host and website: Angry Bear

My announcement about the changes to Angry Bear seems to have disappeared. The controls are different. The changes include:

  1. Upgrade from Word Press 4.8 to 5.5 plus, which involves better security and other functions.
  2. The comments section has different controls and editing functions for users.
  3. The site is mobile friendly now and has greatly improved readability. Try it out.
  4. Improved SEO.
  5. The sidebar will have thirty or more economics links (to be inserted later).

If any difficulties develop please e-mail me, Bill, or Eric so we can work with the tech team. The new set of controls will take some time to get used to for all of us.

If having trouble with comments, clear the cache in your browser.