Archive for January, 2014

Bloomberg: Emerging Market Rout May Signal ‘Sudden Stop’: Cutting Research

Inflation is increasingly driven by global rather than local factors, meaning central banks in industrial economies may be running overly easy monetary policy.

So say Stephen L. Jen and Fatih Yilmaz of London-based hedge fund SLJ Macro Partners LLP.

In a Jan. 22 report they outlined how forces of globalization — such as international labor arbitrage, free trade and rise of multinational corporations — have driven up correlations between the inflation rates of different countries, especially since the 1990s. The link is less strong for output.

Read the original article on the ‘Bloomberg’ website.

Telegraph: Emerging markets forced to tighten by US and Chinese monetary superpowers

“The epicentre of the global financial storm had shifted to emerging markets from Europe, and this third phase of the global financial crisis is intensifying. We are still in the very early stages,” said Stephen Jen from SLJ Marcro Partners.

“Emerging economies squandered precious opportunities in the past decade to reform and restructure for the new globalised world. Instead, they rode on the coattails of China and ample global liquidity,” said Mr Jen, a former IMF firefighter.

Read the original article on the ‘Telegraph’ website.

NYT: ‘Fragile Five’ Is the Latest Club of Emerging Nations in Turmoil

“People made mistakes investing in these markets just because of the headline G.D.P. and demographics,” said Stephen L. Jen, a former economist for the International Monetary Fund who now manages a hedge fund based in London. Important issues like corruption and governance, not to mention excessive lending in urban areas that favored the political and economic elites, have been ignored, he pointed out.

“Istanbul does not need 100 malls,” he said. “There is a reason these people are poor.”

Read the original article on the ‘New York Times’ website.

Bloomberg: Abe’s Yen Exporting Deflation Risks Davos Tension: Currencies

“If the country is allowed to nurse itself back to health, the world should benefit,” Stephen Jen, a partner at London-based hedge fund SLJ Macro Partners LLP and former IMF official, said in a Jan. 17 phone interview. “You can argue that, by making the Japanese yen weak, it takes output from other countries. But that’s not a complete story. Does the world really want a Japan that stays in depression, or a healthy Japan?”

Read the original article on the ‘Bloomberg’ website.

WSJ: Analysts See Green Light for Further Turkish Lira Weakness

Stephen Jen, managing partner of currency hedge fund SLJ Macro Partners: “Many of these emerging-market economies [including Turkey] are cornered: they have to choose between defending the exchange rate, fighting inflation, and supporting growth. Sudden stops in capital inflows tend to force countries to face lose-lose situations.”

Read the original article on the ‘Wall Street Journal’ website.