Prepare for EM pain

Prepare for EM pain. The Russian ruble is plunging, there's now a likelihood of a Venezuelan default, stocks from Thailand to Brazil are reeling and the Fed hasn't even begun raising interest rates. Stephen Jen, the former Asian rates strategist at Morgan Stanley says the current crop of emerging markets analysts are too young to remember the Asian Financial Crisis of the late 1990's. Many became EM specialists after the term 'BRIC' was coined in 2001 and don't know any serious crisis. Well, the youngsters are about to be schooled, Jen says. At some point, the risk of fractures in parts of Emerging Markets will rise sharply. There has been way too much cumulative capital flows. Nothing the EM economics can do will stop these potential outflows as long as the US economy recovers. (VIEW LINK)

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