Salient to Investors:

Mohamed El-Erian at Pimco said:

  • Weakening emerging-market growth and spiraling currencies risk creating headwinds for a recovering US economy. Longer-term, we should care due to the feedback loop to the US.
  • We will see a tightening of financial conditions to markets, with growth more challenged and the ability of US companies to get top-line growth from emerging markets less going forward.
  • For many emerging nations, capital is flowing out and putting them under tremendous pressure. Some countries learned the lessons from the previous crisis and have self-insured tremendously, but others maintained twin deficits, whose growth dynamics are low and have limited reserves – e.g. Turkey.
  • The Fed will probably reduce its Treasury purchases rather than mortgage bonds.

65 percent of economists expects the Fed to taper at its September meeting.

Stocks in Southeast Asia are falling at the fastest pace in 12 years relative to global equities.

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